McKinsey: Last Week Tonight with John Oliver (HBO)
Our main story tonight concerns business a word that somehow describes the front part of a mullet the second nicest seat on an airplane and the single saddest room in any hotel specifically we’re going to talk about the businesses that make other businesses business their business management Consultants there are three big firms and tonight we’re going to focus on the oldest and largest one McKenzie and Company he’s been around for nearly a century advising both big companies and government agencies on how to fix their most complex and Urgent problems Mckenzie was founded in 1926 by James o McKenzie he was a professor at the University of Chicago and an expert in management accounting by the 1950s The Firm was assisting the White House with Staffing organization which according to the company would lead to the creation of the chief of staff role in 1970 McKenzie helped create the barcode yes that barcode that’s actually true McKenzie did help invent the barcode I know that’s a little disappointing maybe thought it was invented by a grocer in the 60s who dreamt of a away for computers to taste fruit maybe you thought the beeps were just how the program says yum but I’m afraid that you’re imagining a better world than the one we actually live in but it’s not just barcode Innovation firms like McKenzie sell themselves as can do experts who can come in provide an outside perspective and fix whatever ails a company whether it’s re-engineering an organizational chart working on digital strategies or deciding whether to sell off part of their business you name it they’ll advise you on what to do and Mackenzie has worked with everyone from companies like Coca-Cola Best Buy and AT&T to government agencies like the Department of Defense and Ice McKenzie is massive and it’s ubiquitous it has offices in at least 65 countries and an annual revenue estimated at $15 billion but McKenzie doesn’t see itself as just a bunch of PowerPoint slinging power suit wearing mic managers as you can tell from their recruitment videos they see themselves as operating as a Force for good in the world our purpose is to create positive enduring change in the world the work you do with McKenzie will matter what we are doing on a day-to-day basis is really impacting the lives of thousands of people sometimes more what’s really great about McKenzie is it provides you with an opportunity to work on really hard problems that are also really interesting and also really actually matter right Mackenzie Consultants are encouraged to see themselves as World Changers as a humble Mackenzie partner once put it there are only three great institutions left in the world the Marines the Catholic church and McKenzie which is a hell of a group to put yourself in look there’s just three cool guys left in the world now Henry Kissinger Kevin spacy and me and the truth is McKenzie‘s reputation has taken a bit of a knock in recent years it’s found itself under scrutiny for everything from exacerbating income inequality to helping Market dangerous products to enabling authoritarian regimes and former employees have pointed out that for all its talk of making the world a better place it’s worked for some of the planet’s biggest polluters while getting hundreds of millions dollars in return in fact one of those disillusioned employees paints a pretty damning portrait of what the company is at its core they serve a lot of clients with really harmful effects they know exactly what the repercussions are going to be and then they say we’re going to do it anyway and that tells you all you need to know about the firm right that’s an inherently alarming thing to hear about a business isn’t it generally you want companies to mitigate harm not actively seek it out it’s why Lego has a choking hazard warning on its packaging instead of one that says now with blue raspberry flame so if it’s that influential that ubiquitous and is behind so much harm tonight let’s take a look at McKenzie and if this is the first time that you are hearing MacKenzie’s name don’t be embarrassed because for a company with so much reach it’s gone out of its way to try and keep a low profile it doesn’t publicize its Client List and even its offices can be hard to spot we stopped by MacKenzie’s headquarters at three World Trade Center in lower Manhattan well that’s such a powerful company and yet you’d never know they were here there’s not a single Mackenzie sign anywhere why is that they don’t want anyone to know anything about them uh they want everything done in secret and if that includes where they work then so be it well that’s not innate suspicious at all is it you’ve sealed yourselves inside an expensive glass fronted nameless Lair that is completely invisible to anyone unless that is they simply type McKenzie into Google Maps or happen to hear that journalist say three World Trade Center while she literally showed you their address kogs by the way that was a dick move and I genuinely appreciate it but discretion is only part of MacKenzie’s brand they’ve also cultivated reputation for hiring the best and brightest fresh out of elite colleges and MBA program programs and young High achieving types often use a stint at Mackenzie as a springboard to bigger things former employees include Pete budded Senator Tom Cotton Facebook’s Cheryl Samberg and Google CEO Sundar pitchai and McKenzie picks its Consultants through a notoriously rigorous interview process asking candidates challenging and slightly unconventional questions one of the interview questions I was asked in my final rounds was how many pigs are in China which sounds like a very silly question but it’s a really good question to test how you think because it’s not only the answer doesn’t matter it’s how do can you structure a problem can you take a very nebulous situation and put structure around it in a way that makes sense and then logically deduce things in order to get to an answer that’s meaningful I mean sure that is one way to describe it another way might be to say that they’re just trying to see how good you are at bullshitting your way to a plausible sounding answer because if a business really needs to know how many pigs are in China there are ways to find that out like called Chinese pork magnate chin Ying Lin or just Google how many pigs in China or if you’re on your phone just Google how Kenny o and China because that’s still enough for it to go on what do I have to do thrw the map I’m in a hurry my thumbs are fat and I got places to be but once they are hired Mackenzie Consultants work insanely long hours while being schooled in the McKenzie way of doing things something that the firm itself can be pretty insufferable about a partner once said we don’t learn from clients their standards are aren’t high enough we learn from other McKenzie Partners a sentence so smug that even if you just read it you’d have automatically heard my accent in your head cuz that’s not just smug that is British Empire smug and the thing is that level of swagger might make some sense if mackin’s device was consistently novel and Brilliant but it’s had some big misses famously in the early 1980s its client AT&T asked McKenzie to estimate how many cell phones would be in use in the world by the turn of the century and Mackenzie concluded that the total Market would only be about 900,000 phones total which persuaded AT&T to pull out of the market for a while and to be fair McKinzie were only off by around 739 million or 82,000 per.
But even when they are troubleshooting existing problems their bespoke Solutions can be blindingly obvious just watch as one mckin brags in a promotional video about the firm’s ability to come up with unique Solutions we were serving in energy client and their problem was that they uh have offshore drilling rigs and they had Stacks and stacks of paper invoices that they would fly out to these rigs in the middle of the Gulf Coast in hurricane weather to have to get somebody to sign off and then helicopter back to headquarters we brought in a team that had Partners who were experts in the energy sector we had Partners who were experts in procurment as a function and they were able to get together with our digital team and say actually we don’t know if signatures are really required D for this yeah no [ __ ] I’m not sure speaks that well of you that you needed the digital team and experts in the energy sector and procurement as a function whatever the [ __ ] that means to get to the conclusion why not send an email instead of a [ __ ] helicopter and that’s not a one-off over the years they’ have repeatedly been grumbles that McKenzie oversells its Brilliance in the words of one Fortune story while some of its work can be highly sophisticated much of the time The Firm merely reorganizes sales forces or designs buy the numbers downsizing to reduce overhead and those are just obvious first thoughts ideas essentially McKenzie is a firm that projects a huge amount of confidence to sell a frequently unremarkable product at Sky High prices making them truly the Salt Bay of companies you’ve had salt before but have you ever had it from a douche and let’s let’s talk for a minute about downsizing because there is a long history of companies bringing in consulting firms like McKenzie and very soon after aggressively cutting costs this gets dressed up with fancy terms like finding efficiencies and organizational streamlining but what that often amounts to is mass layoffs and look layoffs are sometimes necessary but they’re always painful and much more painful than some mid-20s Ivy leager who fancies himself a business genius might realize 24 years ago Mackenzie allowed a documentary crew rare access to film a training session for young Consultants going through an exercise where they roleplayed advising a real life client here they are joking about how they would break the news that layoffs were going to be necessary we got a very simple strategy just what do you say that’s not our communication strategy H look um I’m not a violent person but if all those [ __ ] exploded I would absolutely spin around singing It’s Raining Men but but that is emblematic of a major role that Consultants like McKenzie play essentially allowing Executives to say I know job cuts are bad news but it’s what McKenzie told us to do as one book on the company put it they are without question the gold to consultants for managers seeking justification for Savage cost cutting as well as a convenient scapegoat on whom to blame it though there is one area where Mackenzie has historically advised the exact opposite of cost cutting and that is executive pay starting in 1950 consultant of theirs named Arch Patton started advising corporate leaders that they were underpaid writing books like men money and motivation executive compensation as an instrument of leadership his advice was so wildly popular that for a Time Patton personally accounted for almost 10% of the firm’s Billings and later came to be seen as a major contributor to skyrocketing EX itive pay in fact when he was asked in the ‘ 80s about how he felt about the effect of his work his reply was simple guilty and while it’s hard to gauge tone from that I’m just going to hope that it was a sober reflective guilty and not as seems much more likely a naughty mischievous guilty I could Ed to respond to who spikes the punch so to recap McKenzie‘s advice can be expensive but obvious it predictions can be deeply flawed and it’s arguably helped supercharge economic inequality in this country all of which is pretty striking coming from a company whose leader you’ve already seen sum up its fundamental Mission like this our purpose is to create positive enduring change in the world yeah but is it though because let’s talk about that a quick look at McKenzie‘s Client List shows a bunch of companies going out of their way to do the exact opposite of positive enduring change because it’s not just those oil and gas companies that I mentioned earlier The Firm also began counseling the tobacco industry in 1956 well after we knew smoke smoking caused cancer you might be thinking well come on John it was the ‘ 50s lots of people were okay with smoking back then but you should know McKenzie only stopped working with tobacco companies in 2021 which is and this is true too late that’ll be like finding out that Subway dropped Jared’s contract today wait he he was still in commercials from prison how could anyone think that this was okay and if you think that was damaging mckines also worked with Purdue Farmer they actually made nearly $84 million in fees from Purdue for advice on how to quote turbocharge sales of Oxycontin in fact listen to the AG of Massachusetts explain just how intimately Mckenzie was involved in pdue sales process McKenzie Consultants actually rode along with went with Purdue sales reps to doctor’s offices here in Massachusetts to critique them on how effective they were at selling oxyon it’s true they did Ride Along alongs and honestly I didn’t think I could have any sympathy for puru sales reps until I learned that they were trapped in a car with a McKenzie consultant for hours yeah you you mentioned that you went to Harvard can we please just be quiet and go sell some poison but it’s not just private companies remember Mackenzie is frequently hired by government agencies too where again their advice is not brought universally positive change for instance in 2014 New York City brought Mackenzie in to figure out how to reduce violence at Reiko a project whose cost ballooned to $27 million people ask questions at the time about whether that was a good use of money but the head of the city’s Corrections back then insisted that Mckenzie was worth every penny if we made any progress it was because McKenzie‘s help in areas that we needed help in wow that is some High Praise there to claim that Mckenzie was the sole reason for any progress made at Rikers would be a pretty impressive compliment if you didn’t know anything about the state of rikus so what imaginative strategies did McKenzie try to implement I don’t know just fun things like expanding the use of tasers shock guns and aggressive dogs it’s some very outside the box thinking for people literally trapped inside boxes but his big project was an antiviolence program called restart and it claimed that violence had dropped more than 50% in the restart facilities which sounds great and fortunately it turned out that number was bogus because jail officials and McKenzie Consultants had reported jointly rigged the restart program by stacking the units with inmates they believe to be unlikely to get into fights or to attack staff in the first place and while McKinzie to this day defends that program and denies skewing the results it is notable that when prua later crunched the numbers for Rikers overall they found that jailhouse violence there had actually risen nearly 50% since McKenzie began its assignment and honestly you kind of got to hand it to McKenzie there not many firms could get paid 27 million of taxpayer money to leave Rikers somehow even worse and it’s not just jails mck’s government clients also include Regulators which can get a little weird when you consider that McKenzie also represents corporate clients for instance remember how it worked with Padu farmer while it was working for them it was also working with the FDA that sure seems like a clear conflict of interest and it was one that even Mr. positive and enduring change here found a little hard to explain to Congress after the fact okay.
So let me ask you did you disclose to the FDA your McKenzie‘s work at the same time did you disclose to the FDA that McKenzie was working at the same time it was working for the FDA that it was working for Purdue did you disclose that to the FDA we made clear in multiple instances that the individuals involved had experience in both Pharmaceuticals and opioid claiming my time Mr. Steinfeld they didn’t have experience they were the identical humans working for both at the same time exactly and there’s a big difference between having experience working for both and actively working for both at the same time it’s the same difference between telling your wife about your ex-girlfriend and telling your wife about your current girlfriend one is dramatically worse than the other and casy Porter was right there there were multiple instances of McKinzie Consultants working for both pdue and the FDA at the same time at one point four Consultants working on an FDA contract to enhance drug safety were simultaneously working for Padu on projects designed to persuade the FDA of the safety of puu’s product one project even had them writing scripts for Padu to use in a meeting with the FDA on the safety of pediatric oxy content pediatric oxy oxy for kids you know just like in that episode of Dora the Explorer when backpack is getting a bit too heavy and Boots gives her a little something to take the edge off now McKenzie claims there was no conflict there and that the nature of their work for the FDA and Purdue was different which is a little hard to take considering that they sold themselves to Purdue at the time with the notion that they had special insights into the FDA they told puu in 2014 that they brought an unequaled capability based on who we know and what we know including the FDA who we have supported for over 5 years so hold on McKinzie which is it then was the work you did for the FDA totally different or did it help you bring an unequaled capability to per do CU it can’t be both this isn’t schroedinger’s contract you can’t get to claim it’s both relevant and unrelated depending on who the [ __ ] you’re talking to and at this point I could stop tobacco opioids Rikers those are already some pretty unpleasant stains on a company’s record but here’s the thing all the examples so far are just from the US remember McKenzie now has offices all over the world and from them they have cozied up to some truly terrible clients they’ve worked for a Russian defense contractor and are so deeply entrenched in the government of Saudi Arabia the Saudi Arabia’s planning Ministry has been dubbed the ministry of McKenzie and it will loudly defend its work there saying that it feels it’s making the country a better place but that feat of mental gymnastics got a little trickier after Jamal Kofi was assassinated just a few months later Macken’s head at the time was on CNB trying to defend its work in the country and reassuring everyone that had a strict moral code the work that we do and we think very hard about the work that we do needs to be work that does make a positive difference sure and that’s what I’m for doing business with a murderer is okay by you no it’s absolutely not okay and you and when when you find out that your client is a murderer you do what you walk you walk oh you walk do you that sounds good except here’s the thing they didn’t walk their client killed and dismembered a journalist and McKenzie responded by participating in a major Saudi Investment conference that same month even as other companies pulled out so unless you walk is short for you walk to the front of the line and pick up your lanyard for another fun weekend at the journalist Cho in business Jamboree you are full of [ __ ] but wait wait because it gets even worse because it later emerged that in one of McKinney’s reports it highlighted three people who drove negative conversation on Twitter about Saudi government policies this is that Slide featuring names pictures criticisms and follow accounts and subsequently some of those people were and you’re not going to believe this targeted by the Saudi government in fact one of their phones was hacked revealing Communications with you guessed it Jamal Kofi now at this point I have to tell you McKenzie insists there is no evidence the slide deck was connected to the death of Jamal Kofi or exposed dissidents and that the deck wasn’t prepared for the Saudi government in fact when this story initially came to light they said the reports intended primary audience was internal and that they were horrified by the possibility however remote that it could have been misused in any way but come on it’s Saudi Arabia even if that report didn’t fall into their hands and please what part of the way Saudi Arabia operates made you think that a McKenzie created list of shit talking dissidents would be a good thing to put together you’re working in one of the routinize tourist journalist shit regimes in the Middle East and you figured it was completely fine to draw up a list like this because the potential for misuse was remote what are you talking about this is a government led by Muhammad bin Salman a man who and this is true once detained his own mother did you think that if NBS were to stumble across a list of his hazers he’d just send them a big no hard feelings about all the dissident stuff Edible Arrangement the [ __ ] is wrong with you and for what it’s worth a former McKenzie consultant has called that whole internal document excuse utter horseshit and look McKenzie will claim that all the examples I’ve given you tonight are just isolated cases not representative of their work overall what’s more they’ll say that they’ve revamped their policies on client selection and that if a client or proposed project falls short of our standards we will not do the work although they are still working in Saudi Arabia so the standards seem at best [ __ ] flexible they also want to tell you that they do a lot of projects like helping clients deploy vaccines or supporting refugees and rebuilding it in Ukraine which is very nice but think of it like this how many uplifting McKenzie projects like more snuggles at the puppy Factory or make Grandma live forever would you need to hear about to effectively counterbalance turbocharge the opioid epidemic help [ __ ] up Ryker’s even more and make a Saudi Arabian snitch list and look it’s not just McKenzie with these issues their main competitors have had them too BCG was also in deep with the Saudis and Bane was banned from State contracts in South Africa for a decade thanks to its role in a massive corruption Scandal and I’m not even saying the Consulting industry should be abolished getting outside feedback on best practices can make a lot of sense for an organization we certainly need to preserve a career path for high achieving table bullshitters who don’t want to commit to law school and want to spend their Prime year’s flying business class to Dallas companies can feel free to hire as many fresh-faced dark sociopaths as they want to take the heat for whatever layoffs And/or atrocities they were already launching in the first place it’s a free country or not depending on where the McKenzie office is but but if their work as they claim really does impact the lives of millions of people they shouldn’t get to be invisible and they should expect much more accountability for their mistakes and until such time as that happens the very least they can do is be a bit more transparent with their recruiting videos going forward hi there here at McKenzie we’re an elite group of strategists thinkers analysts innovators guys named Braden and Delta Platinum Sky miles reward members here to drive client success in any business venture we’re proud to say McKenzie alums include many of the most powerful people on Earth and also Pete Buddha judge we at Mackenzie genuinely believe great Consultants can come from anywhere that’s why our Workforce features an incredibly diverse array of graduates from all over the ivy league even Cornell so if you’re an ambitious college senior or an MBA graduate who needs to be told you’re special or you will die we’d like you to consider a careered McKenzie the best part of my Harvard Education was the look on people’s faces when I said I go to Harvard I really passionate about belonging to groups that impress people and so to be able to continue that at mcken has been very fulfilling one of the interview questions I was asked in my final round was how much wood would a woodchuck chuck if a woodchuck could chuck wood sounds like a silly question but it’s actually a smart way to test your approach to problems and how many billable hours you can talk for in my case a lot here at McKenzie you’ll have the opportunity to change the world by serving a surprisingly wide array of clients but not just anyone for instance we proudly don’t work for tobacco clients and haven’t since the start of this sentence we’ve got clients that appeal to every interest local interests foreign interests and even conflicts of interest I worked for the FDA and Purdue Pharma at the same time I can’t believe I was allowed to do that my mom did say shouldn’t that be illegal and that made me really worried until I remembered she’s not a consultant of course she wouldn’t understand I was basically talking to an ape we hold our employees and our clients to a higher personal and ethical standard core McKenzie values will always do you have a phone call not now it’s the Saudis actually I do have to take this I think it might be about the thing you got BR be but the point is you’ll be using your big special early 20s brain unencumbered by practical experience to develop the poke tailored solutions to address company specific needs what we’re recommending is finding significant efficiencies by laying off the people at the bottom of the company and paying more to the people at the top hey that’s me with the money signs it’s me at the top okay look we believe there are three great institutions left in the world the Marines the C church and McKenzie that’s because the mark of any good institution is matching outfits evasion of responsibility through institutional secrecy and the misplaced belief that you’re saving the world because at the end of the day we’re Mackenzie we’re McKenzie we’re McKenzie we’re McKenzie and we’re capable of anything and culpable for nothing I love that l i mean it’s true we can’t you know it can’t touch us it’s true yeah
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