Former McKinseyite here (and one reasonably skeptical of the firm as a whole)... nobody hires McKinsey for fresh college grads. That’s just something they tell fresh top of class Ivy League college grads to make them feel important. Clients hire Directors to give them peer level strategic counsel. How they technically allocate payment for time across consultants is just backfillling to get to a number already agreed to in advance.
By the way, this is not to denigrate the analysts at McKinsey who were in my time typically very smart, nice, hardworking, etc... They performed an important data gathering function. But the bill for their time has the sort of relationship you get when a Legal Assistant at Cravath photocopies stuff in your file. No they aren’t “worth” $500k/hour or whatever rate they bill at these days to photocopy but that isn’t the point. You are paying for Cravath and how that Cravath fee is broken down is largely irrelevant.
This is slightly twisting what you actually get, though. You want the Director-level time (and that's what is advertised during the sales process), but realistically you get a team of largely inexperienced kids supported by the person you actually want, who gives you a few hours while billing for the whole team to meet their blended rate target. In a lot of cases it's become a bit of a weird situation where the strategic guidance is almost free if you sign up to pay for a team of 20-somethings to follow a playbook and make some decks.
I've worked with various from McKinsey. The work is not that impressive. It's like having an MS Office expert, especially Excel and Powerpoint. The person is able to work long days, so after a workshop they spend a huge time to make it look nice again. Though one told me they have a separate department for quickly making presentations look "nice". Meaning, the consultant just sends it off to that other department.
Reading how expensive they are I'm glad McKinsey isn't used anymore.
The major reason they're hired is because of the McKinsey name (convincing others in your company). Not so much for anything else IMO. Maybe you we're doing great work but that's not the ones we saw (I saw various).
Have been on the receiving end of several McKinsey engagements.
The work itself was generally not all that good. The knowledge of “experts” brought into meetings rarely contributed more than what a reasonably intelligent person could dig up on Google search results in an hour. They were also often farmed out on random staff augmentation functions that just annoyed the hell out of people. “Hi I need you to fill out this excel spreadsheet with 35 columns so we can put a presentation together... oh and if you could do that by 6 PM tonight that would be great.” That sort of nonsense so they could produce some nonsensical 50 page PowerPoint deck that nobody read.
There were a few decent people there but by and large value was not generated. As others have pointed out a major motivator seemed to be to provide some C-level exec with CYA coverage to claim that programs being implemented were based on the advice of outside “experts.”
In the two main cases I saw the McKinsey strategy ended up being a total disaster that seriously damaged the company and the C-level exec that hired them in both cases got canned as a result so in the end even the CYA concept didn’t really work.
Sort of a buried lede here. There's nothing shocking about overpriced, underdelivering consultants. But the bit about how the GSA is essentially profit sharing with said overpriced consultants at the expense of the rest of the government and taxpayers, via the IFF incentive structure, is pretty mind blowing. Another brilliant financial "innovation" by the Clinton Administration that's been quietly burning billions of taxpayer dollars to the end of significantly less efficient government for decades now...
McKinsey, Bain, BCG, et. al. are all extremely close to state and industry in all countries.
I'm from Norway, and every now and then someone will publish articles about the governments exorbitant use of consultants (McKinsey at that) for seemingly menial tasks which should be handled internally.
Truth is, these management consulting firms have some very good advantages to keep their business model going:
1) Their alma matter is spread all over the world, usually in the upper management.
2) They get highly detailed information from all sides, and can tweak their best practices accordingly.
3) They take the blame, so as others have mentioned, they're basically a million $ CYA insurance for both politicians and executes alike.
You could remove incentives like those mentioned, but I'm sure they'll find some other way to make money. They're so tightly integrated, and in so many places around the world, they probably have hundreds and thousands of strategies up their sleeves.
Had a lot of experience with McKinsey doing projects at my company at different levels I’ve been in throughout it the years. When it’s highly technical things like implementing a new technology you know nothing about or a new manufacturing footprint that is tangible to perform, they do good work. Anything “Strategic” or fluffy I find a waste of time. They are excellent salespeople and do a lot to calm the C-suite but I rarely see these fluffy items driving employee happiness or the bottom line after spending millions.
I was a technical project management consultant for a long time. The value that most orgs get from a consultant isn't really in the advice the consultant gives them, it's the political cover to make changes they knew they should make all along, but didn't have the social capital or the focus to make those changes until they had a person in a chair across from them.
Within any organization, you can have 3 or 6 important people pushing in completely different strategic directions. And it can be clear to any unbiased observer that there's only one good, responsible choice, but within your org that gets met with essentially "but that's just your opinion, man".
So you call in a consulting firm and they deliver what most of the people already know. The consultants don't need to be rocket scientists.
But afterwards, nobody can say it's just your opinion any more. It's now expert analysis that you paid good $$$ for, and everybody who disagreed before now basically has to get on board.
So it's not even necessarily political "cover", but almost like a referee that brings enough credibility to settle otherwise intractable internal disputes.
Also, this lets the CEO appear unbiased to all the people who "lost". So they can get on board with the new policy but not feel like the CEO shot them down personally, which is bad for morale, can lead them to quit, etc. (Just because they believed in the wrong strategy doesn't mean they still can't be super-valuable in the future in executing the right strategy.)
I have done lots and lots and lots of enterprise sales and consulting, and a big part of bringing in outsiders is to provide the illusion of social proof.
"Well, we had the experts in, and they found..."
That sounds really, really terrible when put so cynically, but the flip side of that is to view it as insurance. If you bring the consultants in, hoping that they will recommend Plan A, and Plan A is truly terrible, a reputable consultant will find a way to sell you on Plan B, by couching it as "A few adjustments to Plan A."
So in effect, yes, it is about making changes management wanted all along, but in addition to providing the illusion of social proof, you can also get an extra set of eyes to make sure that you don't completely footgun yourself.
Sometimes. Maybe. If the consultants are good at both analysis and selling management on adjusting their plans...
This entirely misses the forest for the trees. And granted the author's bias gets in the way of his attempt to point out that forest. Their bias aligns with mine, but with less editorialization IMO the following would be more clear:
It's not that the work is or isn't valuable, or where that value is. It's that McKinsey charges 72% more than a competitor for the same consulting, and that there's a massive perverse incentive for public servants in charge of awarding contracts to pick the most expensive one.
From the article, bias left in:
Back in August, I noted that McKinsey’s competitor, the Boston Consulting Group, charges the government $33,063.75/week for the time of a recent college grad to work as a contractor. Not to be outdone, McKinsey’s pricing is much much higher, with one McKinsey “business analyst” - someone with an undergraduate degree and no experience - lent to the government priced out at $56,707/week, or $2,948,764/year.
...
And this gets to the second reason why McKinsey can charge so much, which has to do less with McKinsey and more with an incentive to overpay more generally. It’s more likely something called the ‘Industrial Funding Fee,’ or IFF. The GSA’s Federal Acquisition Service gets a cut of whatever certain contractors spend using the GSA’s schedule, and this cut is the IFF. The IFF is priced at .75% of the total amount of a government contract. In the case of McKinsey, since 2006, “FAS has realized $7.2 million in Industrial Funding Fee revenue.”
...
Does McKinsey do a good job? The answer is that it’s probably no better or worse than anyone else. I’m sure there are times when McKinsey is quite helpful, but it’s in all probability vastly overpriced for what it is, which is basically a group of smart people who know how to use powerpoint presentations and speak in soothing tones. You can just go through news clippings and find areas McKinsey did cookie cutter nonsense. For instance, McKinsey helped ruin an IT implementation for intelligence services. In the immigration story, MacDougall shows that the consulting firm encouraged ICE to give less food and medical care to detainees. That’s cruelty, not efficiency.
That's also Epic's (the healthcare software vendor) big value proposition. Their software is okay—among an industry filled with shit, their turd is at least polished.
But their delivery model is incredible: they make customers woo them (shouldn't vendors be doing the wooing?), and they have a prescribed way of doing things if they decide you're worthy to purchase their product. What you get in return is a constant cudgel of "this is the Epic way" to yield when talking with practitioners who are used to doing things their own way (especially doctors—nurses are more flexible and pragmatic, in my experience). This can be especially useful when you have a system of multiple facilities that's grown through acquisitions, with each facility having decades of accumulated practices that aren't quite aligned with your other locations.
I have been on the "client" side of consulting engagements and a consultant myself. I think you identify the central truth of consulting: that usually we're not bringing any magic knowledge to the table.
However, I think there are other circumstantial values that appear alongside the one you identify. I find that consultants not only provide cover, but also provide a level of focus on non-immediate, but important, problems that doesn't otherwise materialize on its own. Nobody wants to be seen wasting the highly paid consultant's time so you often get people paying attention when they might not otherwise. There's also setting the stage for what ends up as a sort of professional group therapy sessions and with the consultant as a mediator. I think you touch on that, but maybe I see some greater emphasis on that bit.
This is why consultants hire Ivy League graduates. To create a myth of "Ivy League" "quality" justifying the decisions they are hired to recommend.
The other thing management consultants do is industrial espionage -- they go into a company to learn how it work, and then advise other companies on how "industry leaders" operate.
it's the political cover to make changes they knew they should make all along
No argument here. Every single time that I've been in an organization that has brought in management consultants, the results of their work were almost exactly in line with advice that we had been feeding upper management for some time.
It's infuriating to have the right answers to solve problems while people at the top ignore good advice and then spend huge amounts of money to get that good advice repeated to them by other people.
Even worse is when upper management acts like the consultant advice is the first time they've heard those recommendations.
Absolutely this. It baffles me how many people can understand and repeat ad nauseum "nobody ever got fired for buying IBM" but don't get the role a consultant plays in corporate strategy.
In france, its a classic move by big companies to have mbb formalize what they already know: a need to restructure which unfortunately involves firing people. Its easier to justify restructuring because mbb said so than because the company says so for some reason ^^
High end consultancies have sold oursourcing that decimated the UKs IT orgs, and are now selling in-sourcing, whilst in reality many are just selling outsourcing to them with new buzzwords like DevOps and microservices.
It might be what the businesses wanted to do all along, but I'm not sure it's what they "knew they should be doing".
I don't subscribe to this viewpoint. You have to have the clout to bring in the consultant in the first place. Now it may be a buy vs build decision and you are looking for advice on the buy side but I don't see it being about political cover when your "reputation" would be tied up with the consultant.
There's another piece to it too: they are able to legally sell trade secrets between organizations. They update their "knowledge base" every engagement and become "specialists" in the field.
Exactly. Early in my career I learned that a consultant is almost never hired by an organization, a consultant is hired by a faction within an organization who already knows what they want the deliverable to be.
Yup, definitely true. I just got paid a fairly handsome sum for a one week gig at a large organization to write a report about a technical change. It was clear what the outcome was supposed to be and that the manager (who was just taking over some new orgs) already knew what they wanted to do, and just needed an external report to both bolster their decision and CYA. Luckily, what the manager wanted to do is also what I would have recommended, or it could have gotten a bit awkward.
$1M for a six week “EM plus two” engagement is on the high side, but it’s about par for the course for most McKinsey contracts. The standard is usually $500k-$1M for that kind of engagement. I think this is kind of a non-story for anyone who is actually familiar with the consulting business model. The brand is all McKinsey really has, and they are very quick to offer free engagements to protect the brand if true value isn’t being delivered.
I find it absolutely INSANE that highly specialized organizations like the NSA rely on McKinsey to direct their future operations.
These people have intimate knowledge of their organization and culture, shaped and hardened by years of challenges and learned experiences. What can they possibly think bringing an outsider in to do a complete overhaul will solve!?
Why can they not apply their own experience to solve problems in their own organization!? The proliferation of consulting firms baffles me. It seems like you’re just paying people for critical thinking.
Unrelated: All of my classmates that went into consulting joke about how absurd the field feels to them.
The IFF referenced in the article seems like a great example of how good-intentioned changes to incentive structures can have very warped outcomes, potentially years later. These kinds of effects keep popping up for me, even in industry contexts (e.g. stack ranking).
Are there accepted mechanisms for systematically identifying these knock-on effects, and if so, what are they and how can they be more broadly applied? How many "hops" of influence can you get away from the change before the effects are impossible to predict?
Or does it just boil down to "ask very smart domain experts to think about the problem very hard for as long as you can afford to pay them"?
I don't remember seeing HN articles about McKinsey before this month or last. Now there are three articles about McKinsey on HN, including one that says that the Houston Astros' sign-stealing exemplifies the decline of a McKinsified America. (Or maybe it's the Astros that are M'd.)
McKinsey comes up because they are an elitist consulting firm and HN is somewhat of an elitist forum. I am using elitist in a good way, although there’s certainly elitist attitudes on here.
As someone who might join a Big 4 in IT consulting soon it’s nice to see what McKinsey is up to. It’s much nicer to see accountability for one’s actions.
McKinsey has been generally in the news of late as Pete Buttigieg has gotten more traction in the polls because that's that he credits for much of his experience. Its probably not HN specific.
Matt Stoller has been pumping out issues about government contracting over the past few months, and they’ve all been popular on HN. McKinsey is the archetypal management consulting firm and the role of consultants is an important part of any discussion about the concentration of market power. Often comment on these issues concerns the tech companies many HN readers work for.
Presidential candidate Pete Buttigieg has been relatively outspoken about his time working at McKinsey (although he can't discuss specifics due to an NDA), which may have sparked a wave of 'what does McKinsey actually do'
This is true for most NOVA contractors. In 2010-2012, Accenture and KPMG was pretty new to Federal IT Auditing and most of their consultants had never done anything IT related in their lives.
It's ridiculous that accounting and tax firms like Arthur Andersen was able to rise out of Enron's scandal and were able to create catch-all IT divisions and win those contracts from the US government when they had no expertise.
> The consulting firm’s sway at ICE grew to the point that McKinsey’s staff even ghostwrote a government contracting document that defined the consulting team’s own responsibilities and justified the firm’s retention, a contract extension worth $2.2 million. “Can they do that?” an ICE official wrote to a contracting officer in May 2017.
Nope. This is illegal under the FAR. If they're doing it, they should be barred from Federal contracting.
For what it's worth, I think this author gives the GSA a bad wrap based on the analysis of one individual. GSA has to do a LOT of work to award and manage a large number of contract vehicles that allow everyone in government to purchase goods and services at negotiated rates (which also saves them hundreds of thousands on hiring their own contract staff). The fact that the funding fee incentivizes GSA to help people spend more money is not necessarily a perverse incentive - it gives them the incentive to ensure their contract vehicles are effective vs. a normal procurement.
McKinsey have messed up government policies all over the world when it comes to McDonaldization of Society. They are using simple measurements to model how complex societies should work, unfortunately this is only works for McKinsey and their partners.
It's not just governments. Large corporations too frequently use McKinsey to make recommendations for things they want to do anyway (e.g. layoffs or restructuring). From the client executive's point of view, the money spent on a McKinsey contract effectively purchases credibility for these decisions.
My favorite McKinsey story: Back in 2005 UBS (big Swiss Bank) brought McKinsey in to figure out how to expand more rapidly in the US. The consultants suggested, "Hey, you have almost no sub-prime exposure. Everyone's trading this stuff! You gotta go in, and in a big way! It will certainly be a pillar of your US strategy."
So UBS did... The result was one of the most severe debt writeoffs of the Great Financial Crisis.
Lost me at the end ... took an otherwise detailed and nuanced analysis and concluded it with a broad generalization that smooths over all of the detail and nuance.
“At any rate, at some point decades ago, we decided that most political and business institutions in America should be organized around cheating people. In this case, the warped and decrepit state of the GSA leads to McKinsey-ifying the entire government. Mr. Clinton, you took a fine government that basically worked, and ruined it. McKinsey sends its thanks.“
As another comment here mentioned: outsourcing of decision making (consulting) is endemic to bureaucracies, whether that's in government, education or elsewhere.
Has research been done on the amount of money saved/wasted on these consulting firms? Have any economists tried to evaluate whether or not these consulting firms provide any value at all beyond political cover for bureaucrats afraid to make or incapable of making decisions?
From my brief experience working in a large University's bureaucracy and seeing how consulting firms took advantage of the school, I believe the public is being swindled by companies like McKinsey and others. If private corporations want to spend money on consulting firms without any tangible benefits, fine. But taxpayer money should not be wasted on these corporate vultures.
There's a lot to unpack here, but the general gist is that McKinsey is overpaid for mediocre services. It's hard to argue against that, and McK in particular does have some insanely unjustifiable rates, but I do think the author has a bit of a misunderstanding of why consultancies are hired in the first place.
To be clear, when a consultancy like McK puts a 23 year old analyst on a project, the $50k/week bill isn't just paying for the knowledge in the analyst's head. The analyst is really just a vehicle to deliver the expertise of the actually-experienced consultants and knowledgebase of the entire firm. The experienced consultants don't have the time to sit and write out the powerpoint deck, so instead they throw as much knowledge as they can at the analyst and the analyst is the one who synthesizes it into something digestable by the customer. Is it worth $50k/week? Fuck no. But it is at least worth recognizing that you are getting more expertise than a sole bachelor's degree.
Second, as someone who has both worked as a consultant at major companies like McK and worked on the other side of the table, and as someone who has long despised the consulting profession because of its overpriced bullshit, I think the author would be surprised at how effective even a measly 23 year old can be. As a consultant, it would drive me insane that my company was billing me out at $700/hr to help implement an IT system when all I was actually doing was reading and regurgitating the software's documentation and making sure that the client didn't ignore it. Surely the client could do this themselves and save the $700/hr, right?
It took me a long time to realize that the answer to this question was actually no. The typical HNer will probably be surprised (and saddened, if you're like me) to realize that the average corporate worker bee is in fact not competent enough to do the most basic tasks, such as refer to documentation, without hand-holding. It is an unfortunate reality that sometimes a well-educated and well-vetted 23 year old analyst can do things much better than an 20-year industry veteran. Companies do know this, and this is what they are paying for, much to the chagrin of the rest of us.
As a last note, the author mentions the possibility of just hiring an IT professional to do the work instead of hiring a consultant. This is something I also see come up a lot in consulting discussions. The reason this isn't done is because hiring an employee full-time brings on a lot of risk to the hiring company. It can take months to hire someone, many more months to train them, and then if they don't perform up to snuff, it can take years to build up a case to fire them, all the whole they are sitting on your payroll taking up budget. A consultant, on the other hand, can be hired in a day, trained in a week, and if needed, can be fired in a minute. You pay a premium for the agility to hire and fire them quickly, but that's the entire point.
I'm sorry but no case is made to support the idea that taxpayers are buying generic advice. Let's agree that the service buys a fresh college grad assigned full time. The grad might be a customer contact collecting and organizing customer issues before presenting them to internal subject matter experts, and then presenting those findings back to the client. I'd like to hear evidence to support how the service is fresh college grads simply using what they learnt in college and their chutzpah, which is what the article implies.
[+] [-] jshaqaw|6 years ago|reply
[+] [-] jshaqaw|6 years ago|reply
[+] [-] mdorazio|6 years ago|reply
[+] [-] bkor|6 years ago|reply
Reading how expensive they are I'm glad McKinsey isn't used anymore.
The major reason they're hired is because of the McKinsey name (convincing others in your company). Not so much for anything else IMO. Maybe you we're doing great work but that's not the ones we saw (I saw various).
[+] [-] iudqnolq|6 years ago|reply
Does it mean advice as good as the advice we're giving other firms like you?
[+] [-] code4tee|6 years ago|reply
The work itself was generally not all that good. The knowledge of “experts” brought into meetings rarely contributed more than what a reasonably intelligent person could dig up on Google search results in an hour. They were also often farmed out on random staff augmentation functions that just annoyed the hell out of people. “Hi I need you to fill out this excel spreadsheet with 35 columns so we can put a presentation together... oh and if you could do that by 6 PM tonight that would be great.” That sort of nonsense so they could produce some nonsensical 50 page PowerPoint deck that nobody read.
There were a few decent people there but by and large value was not generated. As others have pointed out a major motivator seemed to be to provide some C-level exec with CYA coverage to claim that programs being implemented were based on the advice of outside “experts.”
In the two main cases I saw the McKinsey strategy ended up being a total disaster that seriously damaged the company and the C-level exec that hired them in both cases got canned as a result so in the end even the CYA concept didn’t really work.
[+] [-] MFLoon|6 years ago|reply
[+] [-] TrackerFF|6 years ago|reply
I'm from Norway, and every now and then someone will publish articles about the governments exorbitant use of consultants (McKinsey at that) for seemingly menial tasks which should be handled internally.
Truth is, these management consulting firms have some very good advantages to keep their business model going:
1) Their alma matter is spread all over the world, usually in the upper management.
2) They get highly detailed information from all sides, and can tweak their best practices accordingly.
3) They take the blame, so as others have mentioned, they're basically a million $ CYA insurance for both politicians and executes alike.
You could remove incentives like those mentioned, but I'm sure they'll find some other way to make money. They're so tightly integrated, and in so many places around the world, they probably have hundreds and thousands of strategies up their sleeves.
[+] [-] l5870uoo9y|6 years ago|reply
[+] [-] Vaslo|6 years ago|reply
[+] [-] z3ugma|6 years ago|reply
[+] [-] crazygringo|6 years ago|reply
Within any organization, you can have 3 or 6 important people pushing in completely different strategic directions. And it can be clear to any unbiased observer that there's only one good, responsible choice, but within your org that gets met with essentially "but that's just your opinion, man".
So you call in a consulting firm and they deliver what most of the people already know. The consultants don't need to be rocket scientists.
But afterwards, nobody can say it's just your opinion any more. It's now expert analysis that you paid good $$$ for, and everybody who disagreed before now basically has to get on board.
So it's not even necessarily political "cover", but almost like a referee that brings enough credibility to settle otherwise intractable internal disputes.
Also, this lets the CEO appear unbiased to all the people who "lost". So they can get on board with the new policy but not feel like the CEO shot them down personally, which is bad for morale, can lead them to quit, etc. (Just because they believed in the wrong strategy doesn't mean they still can't be super-valuable in the future in executing the right strategy.)
[+] [-] braythwayt|6 years ago|reply
I have done lots and lots and lots of enterprise sales and consulting, and a big part of bringing in outsiders is to provide the illusion of social proof.
"Well, we had the experts in, and they found..."
That sounds really, really terrible when put so cynically, but the flip side of that is to view it as insurance. If you bring the consultants in, hoping that they will recommend Plan A, and Plan A is truly terrible, a reputable consultant will find a way to sell you on Plan B, by couching it as "A few adjustments to Plan A."
So in effect, yes, it is about making changes management wanted all along, but in addition to providing the illusion of social proof, you can also get an extra set of eyes to make sure that you don't completely footgun yourself.
Sometimes. Maybe. If the consultants are good at both analysis and selling management on adjusting their plans...
[+] [-] ndarwincorn|6 years ago|reply
It's not that the work is or isn't valuable, or where that value is. It's that McKinsey charges 72% more than a competitor for the same consulting, and that there's a massive perverse incentive for public servants in charge of awarding contracts to pick the most expensive one.
From the article, bias left in:
Back in August, I noted that McKinsey’s competitor, the Boston Consulting Group, charges the government $33,063.75/week for the time of a recent college grad to work as a contractor. Not to be outdone, McKinsey’s pricing is much much higher, with one McKinsey “business analyst” - someone with an undergraduate degree and no experience - lent to the government priced out at $56,707/week, or $2,948,764/year.
...
And this gets to the second reason why McKinsey can charge so much, which has to do less with McKinsey and more with an incentive to overpay more generally. It’s more likely something called the ‘Industrial Funding Fee,’ or IFF. The GSA’s Federal Acquisition Service gets a cut of whatever certain contractors spend using the GSA’s schedule, and this cut is the IFF. The IFF is priced at .75% of the total amount of a government contract. In the case of McKinsey, since 2006, “FAS has realized $7.2 million in Industrial Funding Fee revenue.”
...
Does McKinsey do a good job? The answer is that it’s probably no better or worse than anyone else. I’m sure there are times when McKinsey is quite helpful, but it’s in all probability vastly overpriced for what it is, which is basically a group of smart people who know how to use powerpoint presentations and speak in soothing tones. You can just go through news clippings and find areas McKinsey did cookie cutter nonsense. For instance, McKinsey helped ruin an IT implementation for intelligence services. In the immigration story, MacDougall shows that the consulting firm encouraged ICE to give less food and medical care to detainees. That’s cruelty, not efficiency.
[+] [-] organsnyder|6 years ago|reply
But their delivery model is incredible: they make customers woo them (shouldn't vendors be doing the wooing?), and they have a prescribed way of doing things if they decide you're worthy to purchase their product. What you get in return is a constant cudgel of "this is the Epic way" to yield when talking with practitioners who are used to doing things their own way (especially doctors—nurses are more flexible and pragmatic, in my experience). This can be especially useful when you have a system of multiple facilities that's grown through acquisitions, with each facility having decades of accumulated practices that aren't quite aligned with your other locations.
[+] [-] sbuttgereit|6 years ago|reply
However, I think there are other circumstantial values that appear alongside the one you identify. I find that consultants not only provide cover, but also provide a level of focus on non-immediate, but important, problems that doesn't otherwise materialize on its own. Nobody wants to be seen wasting the highly paid consultant's time so you often get people paying attention when they might not otherwise. There's also setting the stage for what ends up as a sort of professional group therapy sessions and with the consultant as a mediator. I think you touch on that, but maybe I see some greater emphasis on that bit.
[+] [-] gowld|6 years ago|reply
The other thing management consultants do is industrial espionage -- they go into a company to learn how it work, and then advise other companies on how "industry leaders" operate.
[+] [-] crusso|6 years ago|reply
No argument here. Every single time that I've been in an organization that has brought in management consultants, the results of their work were almost exactly in line with advice that we had been feeding upper management for some time.
It's infuriating to have the right answers to solve problems while people at the top ignore good advice and then spend huge amounts of money to get that good advice repeated to them by other people.
Even worse is when upper management acts like the consultant advice is the first time they've heard those recommendations.
[+] [-] Icathian|6 years ago|reply
[+] [-] globuous|6 years ago|reply
In france, its a classic move by big companies to have mbb formalize what they already know: a need to restructure which unfortunately involves firing people. Its easier to justify restructuring because mbb said so than because the company says so for some reason ^^
[+] [-] ownagefool|6 years ago|reply
High end consultancies have sold oursourcing that decimated the UKs IT orgs, and are now selling in-sourcing, whilst in reality many are just selling outsourcing to them with new buzzwords like DevOps and microservices.
It might be what the businesses wanted to do all along, but I'm not sure it's what they "knew they should be doing".
[+] [-] sjg007|6 years ago|reply
[+] [-] thinkloop|6 years ago|reply
[+] [-] dpeck|6 years ago|reply
[+] [-] CharlesColeman|6 years ago|reply
Or the political cover to make the changes they wanted to make all along.
[+] [-] servercobra|6 years ago|reply
[+] [-] astanway|6 years ago|reply
[+] [-] xvector|6 years ago|reply
I find it absolutely INSANE that highly specialized organizations like the NSA rely on McKinsey to direct their future operations.
These people have intimate knowledge of their organization and culture, shaped and hardened by years of challenges and learned experiences. What can they possibly think bringing an outsider in to do a complete overhaul will solve!?
Why can they not apply their own experience to solve problems in their own organization!? The proliferation of consulting firms baffles me. It seems like you’re just paying people for critical thinking.
Unrelated: All of my classmates that went into consulting joke about how absurd the field feels to them.
[1]: https://www.politico.com/story/2019/07/02/spies-intelligence...
[+] [-] hwbehrens|6 years ago|reply
Are there accepted mechanisms for systematically identifying these knock-on effects, and if so, what are they and how can they be more broadly applied? How many "hops" of influence can you get away from the change before the effects are impossible to predict?
Or does it just boil down to "ask very smart domain experts to think about the problem very hard for as long as you can afford to pay them"?
[+] [-] cafard|6 years ago|reply
How did it become the flavor of the month?
[+] [-] wil421|6 years ago|reply
As someone who might join a Big 4 in IT consulting soon it’s nice to see what McKinsey is up to. It’s much nicer to see accountability for one’s actions.
[+] [-] theslurmmustflo|6 years ago|reply
https://www.huffpost.com/entry/pete-buttigieg-secret-work-mc...
[+] [-] mayneack|6 years ago|reply
[+] [-] sjy|6 years ago|reply
[+] [-] mdorazio|6 years ago|reply
[+] [-] sincerely|6 years ago|reply
[+] [-] kevinconaway|6 years ago|reply
[0] https://www.nytimes.com/2019/12/03/us/mckinsey-ICE-immigrati...
[+] [-] Nicholas_C|6 years ago|reply
[+] [-] SigmundA|6 years ago|reply
[+] [-] UltimateFloofy|6 years ago|reply
It's ridiculous that accounting and tax firms like Arthur Andersen was able to rise out of Enron's scandal and were able to create catch-all IT divisions and win those contracts from the US government when they had no expertise.
[+] [-] sailfast|6 years ago|reply
Nope. This is illegal under the FAR. If they're doing it, they should be barred from Federal contracting.
For what it's worth, I think this author gives the GSA a bad wrap based on the analysis of one individual. GSA has to do a LOT of work to award and manage a large number of contract vehicles that allow everyone in government to purchase goods and services at negotiated rates (which also saves them hundreds of thousands on hiring their own contract staff). The fact that the funding fee incentivizes GSA to help people spend more money is not necessarily a perverse incentive - it gives them the incentive to ensure their contract vehicles are effective vs. a normal procurement.
[+] [-] surak|6 years ago|reply
[+] [-] xenocyon|6 years ago|reply
[+] [-] anonu|6 years ago|reply
So UBS did... The result was one of the most severe debt writeoffs of the Great Financial Crisis.
[+] [-] ramzyo|6 years ago|reply
“At any rate, at some point decades ago, we decided that most political and business institutions in America should be organized around cheating people. In this case, the warped and decrepit state of the GSA leads to McKinsey-ifying the entire government. Mr. Clinton, you took a fine government that basically worked, and ruined it. McKinsey sends its thanks.“
[+] [-] corporate_shi11|6 years ago|reply
Has research been done on the amount of money saved/wasted on these consulting firms? Have any economists tried to evaluate whether or not these consulting firms provide any value at all beyond political cover for bureaucrats afraid to make or incapable of making decisions?
From my brief experience working in a large University's bureaucracy and seeing how consulting firms took advantage of the school, I believe the public is being swindled by companies like McKinsey and others. If private corporations want to spend money on consulting firms without any tangible benefits, fine. But taxpayer money should not be wasted on these corporate vultures.
[+] [-] txcwpalpha|6 years ago|reply
To be clear, when a consultancy like McK puts a 23 year old analyst on a project, the $50k/week bill isn't just paying for the knowledge in the analyst's head. The analyst is really just a vehicle to deliver the expertise of the actually-experienced consultants and knowledgebase of the entire firm. The experienced consultants don't have the time to sit and write out the powerpoint deck, so instead they throw as much knowledge as they can at the analyst and the analyst is the one who synthesizes it into something digestable by the customer. Is it worth $50k/week? Fuck no. But it is at least worth recognizing that you are getting more expertise than a sole bachelor's degree.
Second, as someone who has both worked as a consultant at major companies like McK and worked on the other side of the table, and as someone who has long despised the consulting profession because of its overpriced bullshit, I think the author would be surprised at how effective even a measly 23 year old can be. As a consultant, it would drive me insane that my company was billing me out at $700/hr to help implement an IT system when all I was actually doing was reading and regurgitating the software's documentation and making sure that the client didn't ignore it. Surely the client could do this themselves and save the $700/hr, right?
It took me a long time to realize that the answer to this question was actually no. The typical HNer will probably be surprised (and saddened, if you're like me) to realize that the average corporate worker bee is in fact not competent enough to do the most basic tasks, such as refer to documentation, without hand-holding. It is an unfortunate reality that sometimes a well-educated and well-vetted 23 year old analyst can do things much better than an 20-year industry veteran. Companies do know this, and this is what they are paying for, much to the chagrin of the rest of us.
As a last note, the author mentions the possibility of just hiring an IT professional to do the work instead of hiring a consultant. This is something I also see come up a lot in consulting discussions. The reason this isn't done is because hiring an employee full-time brings on a lot of risk to the hiring company. It can take months to hire someone, many more months to train them, and then if they don't perform up to snuff, it can take years to build up a case to fire them, all the whole they are sitting on your payroll taking up budget. A consultant, on the other hand, can be hired in a day, trained in a week, and if needed, can be fired in a minute. You pay a premium for the agility to hire and fire them quickly, but that's the entire point.
[+] [-] riazrizvi|6 years ago|reply
[+] [-] sjg007|6 years ago|reply
It seems worth it to become a govt contractor though..
[+] [-] unknown|6 years ago|reply
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