Jeff Hirsh Read: December 2022
Inspiration: Why is there often significant negative press related to McKinsey?
Summary
Written with the help of ChatGPT, below is a brief summary to understand what is covered in the book.
“When McKinsey Comes to Town”, published in 2022 by authors and journalists Walt Bogdanich and Michael Forsythe, examines the role of the consulting firm McKinsey & Company in shaping the policies of governments and businesses around the world. The book discusses the ways in which McKinsey has used its expertise and influence to advise clients on a wide range of issues, including strategy, finance, and management. It specifically covers the controversies that have surrounded McKinsey, including its involvement in the opioid crisis and its advising of governments around the world on controversial topics such as immigration, outsourcing, and tax policy. When McKinsey Comes to Town is a thought-provoking and revealing look at the power and influence of one of the world’s most prestigious consulting firms.
Unedited Notes
Direct from my original book log, below are my unedited notes (abbreviations and misspellings included) to show how I take notes as I read.
US Steel and Disneyland both examples of McKinsey in to “revive” business/make more efficient but really just cost cut to point of safety degradation which caused worker and rider deaths, McKinsey founded as a values driven company—host Values Day annually, but 2018 and on start seeing exposes of work for clients in opiods, russia, china, dictators, etc that infuriates past partners and public, McKinsey partner put out original study on exec comp not keeping pace with employee comp rises 1950 for GM which spark avalanche of stock comp/pay hikes for mgmt—make corps focus on profit and rising share price with layoffs as main route, domino effect as other firms sees exec pay elsewhere up industry by industry—spark inequality/income gap, offshoring also encouraged by McKinsey—say globalization helps all but really helps wealthy (wealthy need to actively give back gains but rarely do, not automatic), really just kill jobs, within pharma Mckinsey advise both drug manuf and FDA—play both sides for profit (e.g. biogen controversial alzheimer drug approval in ’21), 1bn+ in contracts during obama and trump admin (130mm FDA), preach values but silent on cigarette, vaping, opoids as have clients, not against high drug costs or dtc drug ads, 90s begin robust rel’ship with China as economy rapidly expand—belief with growth comes democracy, Mckinsey embedded with critical state owned enterprises in telecom and military, 2012 Xi to power change any shift to democracy but Mckinsey continue as is, Mckinsey key cog in bringing western know how to China SOE, worked with nearly 25% of critical SOE designated bu gvt in key industries, Mckinsey tout belt and road post 2015 (push clients like Malaysia to align) though seen as china soft power push to entrap poor nations in debt, push china smart cities (mass surveillance), close with key telecom CCC and insurer Ping An, even had party 4 miles from detention camp for Uighurs in 2018 after well known, work since 50s with major tobacco giants Phillip Morris, RJ Reynolds, Lorillard (tisch fam, newports), even Altria more recently—not stop trying to help sell and profit even as scrutiny on industry rise, 18/19 work with FDA and Juul at same time on regulation and marketing, advise Purdue on how to navigate slowing sales—consider DTC oxy, turbocharge sales, target nurses, all as publicity of Purdue rise—help circumvent fda crackdown, mckinsey recommended even a rebate to pharmacies like CVS per estimated overdose to compensate for “lost sales”, on fossil fuels Mckinsey advise biggest polluters in contrast to public claims of climate concern—junior employees increasingly voice issues through today but company not seem to act—prop up polluters in china as well as US/canada, Mckinsey advise citi in late 60s early 70s to reorg structure to decentralize and have specific biz units not generalists—push towards profit goals for each unit, more aggresive lending result but shares up so Chase follow then others on new structure, Mckinsey partner Lowell Bryan was one of biggest advocates of securitization of credit for banks through 80s (in part to salvage bad loans from new matrix structure of units), securitization take loans off banks balance sheets thus require less reserves and thus more freedom to operate, advise Allstate post mid 90s spin from Sears to turn claim center into profit center—instead of modest profit and fair claim payout, should lowball 90% fast/easy and then boxing gloves for other 10% and lawyer up to exhaust them to quit, change insurance industry dyanmics, Mckinsey to all other major players with same abroad to lowball and delay—no longer fair coverage for claims (300bn+ moved from policyholders to insurer profits over two decades since Mckinsey enter picture), Mckinsey eager to involve in south africa but not vet partners properly/not care given fee potential, investigated 2016 by SA authorities for corruption and “state capture”, extracting public funds and funneling to private individuals, working with known corrupt south africans as partners, SA required biz dev partners locally but Mckinsey work with corrupt ones who stole funds, Mckinsey also set up uncapped at-risk fee structure which enable easier laundering, investigation continue through ’21 and power giant Eksom mckinsey supposed to turn around struggle even more for citizens, saudis turn to consultants post arab spring to maintain royal control, MBS to power 2016 after King Abdullah death—know as ruthless “abu rasasa”/father of the bullet b/c sent bullet in envelope to land registry official who wouldnt sign over parcel, BCG also big in Saudi so Mckinsey hired connected local children to help favor, Mckinsey even bought well connected saudi consulting firm Exilir which more or less was gvt agency, Mckinsey help drive saudi social media sentiment mining and produce reports that note specific dissident voices—connected to Khassoghi killing 2018, original advise NHS in 70s as reform under Thatcher and Major—ineffective changes that only boost debt levels, then under Tony Blair and Gordon Brown continue work post GFC as need to cut costs (austerity essentially by cutting staff and low value add intervention), 2011 mckinsey push for more private involvement in NHS despite NHS loved/cost effective relatively, 2012 became law that certain services put up for private bids (help McK clients), American companies more in the picture for example, McK guide Johnson covid test and trace failure with private firms leading
