Book of the Month - March 2023
When McKinsey Comes to Town
Walt Bogdanich and Michael Forythe - ISBN: 978-0-385-54623-2 - 2022
Authors:
Walt Bogdanich
Walt Bogdanich joined The New York Times in January 2001 as an investigative editor for the Business desk. Since 2003, he has worked as an investigative reporter.
He previously produced stories for “60 Minutes,” ABC News, and The Wall Street Journal in New York and Washington.
Mr. Bogdanich graduated from the University of Wisconsin in 1975 with a degree in political science. He received a master’s degree in journalism from Ohio State University in 1976.
In 2008, Mr. Bogdanich won the Pulitzer Prize for “A Toxic Pipeline,” a series that tracked dangerous pharmaceutical ingredients flowing from China into the global market. He also won a Pulitzer in 2005 for “Death on the Tracks,” a series that examined the safety record of the United States railroad industry. He won his first Pulitzer in 1988 for a series in The Wall Street Journal on substandard medical laboratories.
Michael Forsythe
Michael Forsythe is a reporter on the investigations team at The New York Times. Until February 2017 he was a correspondent in the Hong Kong office, focusing on the intersection of money and politics in China.
Until 2013 he was a reporter at Bloomberg News in Beijing and Washington and was part of a team that won the George Polk Award in 2013 for a series that exposed the fortunes of the elite families of China’s Communist Party.
Mr. Forsythe is a veteran of the U.S. Navy, where he served on ships in the Seventh Fleet. He is a graduate of Georgetown University, where he earned a bachelor’s degree in international economics, as well as Harvard University, where he obtained a master’s degree in East Asian studies.
Taken from the NYTimes website.
Brief Synopsis:
An explosive, deeply reported exposé of McKinsey & Company, the international consulting firm that advises corporations and governments, that highlights the often drastic impact of its work on employees and citizens around the world.
McKinsey & Company is the most prestigious consulting company in the world, earning billions of dollars in fees from major corporations and governments who turn to it to maximize their profits and enhance efficiency. McKinsey's vaunted statement of values asserts that its role is to make the world a better place, and its reputation for excellence and discretion attracts top talent from universities around the world. But what does it actually do?
In When McKinsey Comes to Town, two prizewinning investigative journalists have written a portrait of the company sharply at odds with its public image. Often McKinsey's advice boils down to major cost-cutting, including layoffs and maintenance reductions, to drive up short-term profits, thereby boosting a company's stock price and the wealth of its executives who hire it, at the expense of workers and safety measures. McKinsey collects millions of dollars advising government agencies that also regulate McKinsey's corporate clients. And the firm frequently advises competitors in the same industries, but denies that this presents any conflict of interest.
In one telling example, McKinsey advised a Chinese engineering company allied with the communist government which constructed artificial islands, now used as staging grounds for the Chinese Navy—while at the same time taking tens of millions of dollars from the Pentagon, whose chief aim is to counter Chinese aggression.
Shielded by NDAs, McKinsey has escaped public scrutiny despite its role in advising tobacco and vaping companies, purveyors of opioids, repressive governments, and oil companies. McKinsey helped insurance companies' boost their profits by making it incredibly difficult for accident victims to get payments; worked its U.S. government contacts to let Wall Street firms evade scrutiny; enabled corruption in developing countries such as South Africa; undermined health-care programs in states across the country. And much more.
Bogdanich and Forsythe have penetrated the veil of secrecy surrounding McKinsey by conducting hundreds of interviews, obtaining tens of thousands of revelatory documents, and following rule #1 of investigative reporting: Follow the money.
When McKinsey Comes to Town is a landmark work of investigative reporting that amounts to a devastating portrait of a firm whose work has often made the world more unequal, more corrupt, and more dangerous.
Insights:
“[Speaking of McKinsey’s Consulting work for ICE (Immigration and Customs Enforcement)]
‘[Under President Trump] ICE is changing direction,’ he (Richard Elder, Project Leader) announced. ‘And it’s McKinsey’s job to change with it.
When his comments triggered new questions, Elder offered a familiar response, one that conveniently allowed McKinsey partners to sidestep tough ethical decisions.
‘We don’t do policy,’ he said. ‘We do execution.’
Not everyone bought that explanation, including one young member of the ICE team who spoke up. ‘With that logic,’ he said sharply, ‘you could justify working for any despot, even the Nazis.’ In poker, his comment was the equivalent of going all in—win everything or lose it all. At that moment he realized McKinsey was not his future. It was time to leave, and he eventually did, with no regrets.” - pg. 78, emphasis mine
Luhnow’s fascination with numbers extended to the study of players’ bodies and their propensity for injury, a specialty of Mckinsey’s Quantum Blak, which also worked for the Astros. “We often measure asymmetries in player’s bodies because those are the areas most likely to break down", Luhnow told two hundred people at the Singh Center for Nanotechnology at the University of Pennsylvania. - pgs. 214-215 - referencing McKinsey’s foray into athletics with the Houston Astro
Should I read it or skip it?
On one hand, I hated this book. It felt so long and so drawn out. On the other hand, McKinsey’s involvement in everything from governments to baseball made me feel like I needed to know this information. McKinsey has its fingers in lots of pies. They interact with both the Saudi government and the American State Department. They were involved in Enron and the Astros cheating scandal. They were part of the corruption of the South African government’s woes post-apartheid.
Playing both sides of the fence, McKinsey has made a living by not living by the values they claim to espouse. A values-driven organization must live and ultimately die by the values they develop and form their company around. It seems younger consultants have begun to see the hypocrisy. If you belong to a values-driven organization, this book serves as a good reminder of how fast and how wide the road to success can be. It also points out how narrow and slow the road to success can be if you cling to your values. I would read it if I were you.
