PDF Summary:When McKinsey Comes to Town, by Walt Bogdanich and Michael Forsythe

In When McKinsey Comes to Town, Walt Bogdanich and Michael Forsythe examine the powerful impact and influence of the McKinsey consulting firm. The authors argue that McKinsey's steadfast focus on boosting shareholder value often comes at the expense of the working class, contributing to economic inequalities through practices like advocating for outsourcing and devaluing worker loyalty.

The book also explores McKinsey's involvement with controversial entities like ICE, opioid manufacturers, fossil fuel companies, and authoritarian governments. Bogdanich and Forsythe contend that McKinsey's commitment to client confidentiality often shields the firm from accountability, even when its advice leads to negative consequences.

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The book outlines the consulting firm's devised approach to boost the waning revenue from OxyContin sales, which entailed targeting doctors known for regularly prescribing the drug, a tactic that unintentionally aided in its unchecked spread. They also describe how, despite widespread warnings about opioid abuse, McKinsey continued to work for Purdue, even after the company and some of its executives were convicted in 2007 of misleading regulators and the public.

McKinsey's role as an advisor to both opioid manufacturers and the FDA epitomizes a significant conflict of interest.

Bogdanich and Forsythe highlight that McKinsey provided consultancy services to Purdue Pharma to increase OxyContin sales and, at the same time, offered advice to the FDA, the agency responsible for regulating the activities of Purdue Pharma. The authors argue that by not revealing this conflict of interest to the FDA, McKinsey acted unethically and this raised questions about their ability to provide impartial advice, particularly on issues of substantial public health importance.

The book points out the consultancy's significant influence in crafting Purdue's responses to the FDA's questions. The authors indicate that the consultancy's deep entrenchment in the workings of the U.S. government is demonstrated through its advisory position to both a drug manufacturer and the regulatory body supervising it, often benefiting its business clients.

The worldwide crisis related to climatic changes.

McKinsey, a consultancy firm, has garnered substantial earnings, reaching into the millions, through its consultancy services to companies within the oil, gas, and coal industries. The consultancy played a pivotal role in streamlining corporate operations, which in turn supported the growth of environmental damage and climate change through heightened extraction and commercialization of harmful products. Bogdanich and Forsythe highlight the contradiction in McKinsey's urgent calls for climate action while simultaneously offering lucrative guidance to the world's leading polluters.

The authors reveal that McKinsey's internal records confirm its involvement with at least seventeen organizations in the mining and energy industries, and they cite conversations with ex-staff members who conveyed discomfort about these projects. The firm's conduct, as noted by Bogdanich and Forsythe, has a greater impact than its professed dedication to helping clients cut down on carbon emissions.

The engagement of McKinsey with companies in the oil and gas sector is markedly at odds with their professed dedication to safeguarding the environment.

The book outlines how McKinsey has amassed significant compensation from various entities within the oil industry, as well as from businesses involved in natural resource extraction and coal production, while professing a commitment to conserving the environment. The authors detail how the consultancy advised top energy firms like Chevron, ExxonMobil, as well as Saudi Aramco and Teck Resources, one of the world's largest coal companies. Together with their customers, these corporations have emitted vast quantities of climate-altering emissions, hastening the advancement of global warming.

Bogdanich and Forsythe detail how these corporations improve their skills in acquiring and selling oil, methane, and carbon-rich minerals, which unintentionally obstructs the rapid shift away from dependence on traditional energy sources derived from geological deposits. The writers argue that these actions are at odds with the firm's declared dedication to swiftly tackle climate change, indicating an inconsistency in how McKinsey portrays itself as environmentally conscious and the consulting support it offers to large-scale polluters.

The consultants from McKinsey were deeply involved in rigorous debates about how their firm's work for major polluting clients might contribute to the worsening of climate change.

The book details the internal disturbances at McKinsey, where consultants voiced concerns about the firm's contribution to exacerbating climate change through its work with major polluters. The book details the efforts of the "Green Team," a group of environmentally conscious employees, who questioned the firm's involvement with fossil fuel companies, arguing that these engagements were at odds with the firm's stated values.

The book details the instance when more than a thousand staff members from McKinsey banded together to support a letter that publicly demanded a review of the firm's operations, including the disclosure of their clients' total emissions and a pledge to help reduce them. This rebellion, however, was ultimately unsuccessful. The firm's leadership chose not to fully reveal those emissions, opting instead to preserve their connections with key players in the fossil fuel industry, a decision that resulted in many signatories departing in protest. The company's senior leadership, including outgoing and incoming managing partners Kevin Sneader and Bob Sternfels, supported the decision, asserting that the consultancy was well-positioned to help polluters reduce emissions and that abandoning these clients would only make matters worse.

Other Perspectives

• McKinsey may argue that as a consultancy, its role is to provide expertise and operational efficiency to any legal entity, and it is not their place to make moral judgments on the policies of their clients.
• The firm could contend that its work with ICE was aimed at improving efficiency and effectiveness of the agency's operations, which could potentially lead to more humane and orderly immigration processes.
• McKinsey might assert that their recommendations for cost reductions at ICE were meant to optimize resource allocation without compromising the care and conditions of detainees.
• Regarding the opioid crisis, McKinsey could argue that their role was to provide strategic advice to Purdue Pharma based on the business landscape at the time, and that the responsibility for the misuse of opioids lies with the prescribers, regulators, and individuals misusing the drugs.
• In response to the conflict of interest claims, McKinsey might maintain that they have strict internal policies to manage conflicts of interest and that they provide transparent and impartial advice to all clients, including the FDA.
• McKinsey could argue that their work with fossil fuel companies is about helping these entities transition to cleaner technologies and that abandoning them would slow down this transition.
• The firm might also suggest that by working with polluting companies, they are in a position to influence and drive more significant change towards sustainability from within the industry.
• McKinsey could highlight their efforts in developing their own sustainability practices and helping clients with theirs, suggesting that engagement with various industries is necessary to drive broader systemic change.

McKinsey operates with a lack of transparency and insufficient accountability.

The company's commitment to maintaining the confidentiality of its clients' affairs grants it a considerable degree of liberty from repercussions. Consultants are expected to always uphold the secrecy of their client engagements. McKinsey's secretive activities have frequently kept it out of public scrutiny, despite the fact that its advisory services have sometimes led to catastrophic outcomes, such as its participation in the Enron scandal and the contentious issues associated with the Houston Astros.

The preservation of client confidentiality is regarded as a paramount concern.

The company's rigorous adherence to protecting the privacy of its clients has frequently shielded it from scrutiny, even when its actions have threatened public health or aided in the questionable practices of businesses or government entities. Bogdanich and Forsythe depict McKinsey's culture as being firmly rooted in the principle of protecting their clients' privacy. The firm's secretive activities frequently protect it from examination by the public, academics, or regulators, thereby complicating efforts to assess its conduct and determine accountability when clients act unethically, an issue that Bogdanich and Forsythe encountered repeatedly while researching for their book.

The writers argue that the company's steadfast adherence to secrecy and its strict observance of nondisclosure agreements have shielded it from being held responsible for its role in various controversies. The writers contend that the company's commitment to confidentiality enables it to support entities with objectives that might diverge from its proclaimed values or the broader interests of society.

McKinsey places a high value on maintaining the confidentiality of its dealings with clients, ensuring that its business practices remain out of the public eye.

The authors detail how, by embracing a culture of secrecy and instructing its consultants never to disclose specifics about their client work, McKinsey has shielded itself from public accountability. The writers detail the company's unwavering dedication to confidentiality, which has hindered the efforts of academics, journalists, and governmental bodies to fully investigate its role in numerous disputes and determine its accountability for its actions.

Bogdanich and Forsythe contend that the firm's unwavering dedication to confidentiality has enabled it to amass considerable influence while evading responsibility for the collective welfare. The writers argue that the lack of transparency within an entity that wields considerable sway over both governmental and business choices is troubling because it results in a scenario where individuals with significant power avoid the thorough scrutiny and accountability expected from the wider public.

McKinsey frequently prioritizes its clients' needs, which can occasionally be at odds with wider societal concerns.

Bogdanich and Forsythe highlight how McKinsey's focus on serving their clients often results in the overlooking of broader social issues. They argue that, by elevating client service to a near moral imperative, McKinsey has failed to adequately consider the impact of its recommendations on workers, communities, and the environment.

The authors contend that the firm justifies its partnerships with clients, whose products or behaviors could be harmful, by strictly following "ethical standards" that prioritize the legality of the activities of clients rather than their ethical implications. The authors emphasize the consultancy's commitment to placing its clients' needs first, a practice that has allowed it to advise competing companies within the same industries and to support organizations implicated in creating challenges such as economic inequality, environmental harm, and a range of social issues.

The organization succeeded in eluding accountability for its actions.

McKinsey faced limited consequences even though it was connected with the scandals involving Enron and the Houston Astros. In both instances, the company had a large consulting team embedded in those organizations, providing advice for years on strategy and organizational design. The absence of openness about its client dealings allowed McKinsey to evade accountability for the misconduct that led to Enron's collapse and the ensuing dismissals and disciplinary measures within the Astros organization.

Bogdanich and Forsythe argue that McKinsey's persistent involvement in questionable activities over the years was facilitated by an absence of repercussions, a trend that was made evident through its work with organizations like ICE, Purdue Pharma, and several authoritarian governments. The leadership at the firm held the belief that McKinsey would likely remain out of the public eye, even if their advice was misguided or their clients acted without ethics.

McKinsey's ability to avoid responsibility for the negative consequences stemming from its advice is reinforced through its dedication to maintaining the secrecy of its client information.

The authors cite several examples of how McKinsey has managed to avoid accountability for its actions, often by hiding behind its policy of strict confidentiality. The firm has managed to elude responsibility, despite its associations being connected to negative consequences, as evidenced in its transactions involving Enron and the Houston Astros.

The book by Bogdanich and Forsythe describes how McKinsey managed to elude substantial culpability even though its advisors were deeply engaged with the key organizations embroiled in the controversies. Former McKinsey consultants held influential positions at the top of Enron and were also key figures in the executive leadership of the Houston Astros. McKinsey preserved its neutrality in the disputes by underscoring its commitment to client confidentiality and asserting that its consultants always acted within the law, providing advice rather than directives. As a result, McKinsey remained out of the public eye because of its secretive business practices.

The company's avoidance of repercussions from its involvement in the Enron and Astros scandals emboldened it to continue making questionable choices.

The writers contend that the company's tendency to work on the edges of ethical boundaries, along with its ability to consistently evade serious consequences for its actions, has emboldened its executives to continue representing clients of questionable character. The writers argue that the lack of consequences following the Enron and Astros cases entrenched a sense of impregnability at McKinsey, fostering a corporate culture where the pursuit of profit and client satisfaction frequently took precedence over ethical considerations.

The authors argue that McKinsey's history of facing minimal repercussions following involvement in high-profile controversies enabled the firm to justify its later dealings with controversial organizations, including the U.S. Immigration and Customs Enforcement, the pharmaceutical company responsible for OxyContin, and the ruling body of Saudi Arabia. The writers argued that the company's leaders believed they could support clients with products or strategies that contradicted the firm's stated values and were harmful to societal well-being without facing any consequences.

Other Perspectives

• Client confidentiality is a standard practice in consulting and is critical for building trust between the firm and its clients.
• Transparency in sensitive business matters could harm clients' competitive positions, which is not in the interest of either the consulting firm or the client.
• McKinsey's role is to provide advice based on its expertise, but the ultimate decision-making responsibility lies with the client's management.
• The firm may have internal mechanisms for accountability and ethical decision-making that are not visible to the public.
• McKinsey's involvement in scandals does not necessarily imply causation or direct responsibility for the outcomes.
• The firm has faced legal and financial consequences in some cases, indicating that it is not entirely immune to accountability.
• McKinsey's work with various organizations, including those with controversial practices, could be part of broader engagements aimed at improving overall corporate governance and ethical standards.
• The firm has made efforts to address past mistakes, such as changing policies and leadership, to prevent future controversies.
• McKinsey's advisory role across industries can contribute to economic growth, innovation, and efficiency, which can have positive societal impacts.

McKinsey's manipulation of emerging nations and sectors.

The book, written by Bogdanich and Forsythe, explores the expansion of the firm into new markets, leading to collaborations with clients infamous for their unethical behavior and human rights violations. The writers contend that the firm's engagements in South Africa, especially its ties to the Gupta family, and its dealings with authoritarian governments and state-run entities in Saudi Arabia and China, often lead to a clash of interests with the goals of its primary client, the United States government.

Gaining advantage through deceptive actions within South Africa's setting.

The book examines McKinsey's quest for profit by securing government contracts in post-apartheid South Africa, which implicated the firm in a web of corruption, and was written by Bogdanich and Forsythe. The authors argue that the firm's early engagement should be praised for its role in promoting previously disregarded sectors of transportation and energy, which had been ignored because of government bias. However, as President Jacob Zuma's administration grew more embroiled in corruption, McKinsey became inadvertently involved in schemes that enabled the misappropriation of money from the national treasury through different state-run organizations, one of which had previously contracted McKinsey's expertise.

The book describes how McKinsey engaged Trillian, a company among the Guptas' network of shell corporations, to work as a secondary contractor on initiatives for Eskom, the state-run electricity company in South Africa facing difficulties. The authors meticulously describe McKinsey's efforts to deflect blame during the controversy, characterized by a prolonged period of hesitancy to work with investigative bodies and providing misleading details about its connections with Trillian. In the wake of increased attention in South Africa, McKinsey acknowledged missteps by issuing a sequence of apologies, terminated a senior partner's employment, and agreed to return more than $100 million in fees, signifying an uncommon occasion where the firm admitted to misconduct.

The consultancy's willingness to engage with entities of dubious integrity is underscored by their dealings involving the Gupta family of South Africa, underscoring their pursuit of lucrative contracts.

The book chronicles McKinsey's pursuit of profitable engagements in South Africa, leading to its association with the powerful Gupta family, who had strong ties to the scandal-ridden administration of Zuma. McKinsey, in partnership with Trillian, a company linked to the Guptas, undertook a project that was ostensibly aimed at aiding Black South Africans, which facilitated its acquisition of lucrative agreements with Eskom, the government-controlled power supplier of South Africa.

Bogdanich and Forsythe highlight that due to McKinsey's insufficient examination, the Guptas were able to misappropriate millions of dollars that were earmarked for the economic advancement of South Africa. The book details how McKinsey, motivated by its financial objectives, was instrumental in devising a complex scheme that resulted in financial gains for the Gupta family and their political allies.

McKinsey's actions aimed at downplaying its involvement in government corruption and its subsequent steps to reimburse fees.

The book outlines the comprehensive strategies McKinsey implemented to address accusations linked to its participation in the pervasive corruption scandals commonly known as "state capture" in South Africa. The book chronicles how McKinsey initially disavowed any links to the Guptas and Trillian, but subsequently conceded their involvement after multiple investigations.

The authors describe a situation where senior leaders at McKinsey chose to return the fees they had received from agreements with government-controlled entities and issued apologies. The company consistently denied any participation in unlawful actions. The writers argue that McKinsey's efforts to distance itself from the turmoil in South Africa reflect a lack of concern for the needs of one of the world's most unequal societies in terms of equality.

Advising the leadership of Saudi Arabia.

The need for consultancy services in Saudi Arabia experienced a marked increase following the Arab Spring uprisings, as noted by Bogdanich and Forsythe. The Saudi Arabian authorities took measures to modernize their system, which was known for prohibiting women from driving and imposing strict internet censorship, to deter their citizens from emulating the uprisings in Egypt and Tunisia. McKinsey sought to provide support, with the authors highlighting the firm's eagerness to ingratiate itself with the royal family through hiring relatives, acquiring a well-connected local consultancy, and emphasizing the significance of the kingdom's transition from an oil-dependent economy to a diverse and modern financial framework.

In 2015, Mohammed bin Salman (MBS), the favored son of the elderly king, rose to a significant role of power. McKinsey worked in partnership with Saudi Arabian officials to conceive a grand urban initiative and to formulate plans to tackle the country's unemployment issues. However, the company's extensively recorded close ties with Mohammed bin Salman turned into a matter of remorse following revelations of their engagement with Saudi Arabia in a plan aimed at monitoring and muting critics on Twitter, which became public knowledge not long after Jamal Khashoggi was killed in 2018.

As Mohammed bin Salman rose to prominence, the sway of McKinsey & Company grew alongside, bolstering his control over the kingdom.

The book details the long-standing and comprehensive involvement of McKinsey with Saudi Arabia over an extended period. The book details how the company's foray into the Middle East in the 1970s resulted in substantial profits derived from its engagements in Saudi Arabia, playing a role in the economic advancement and the transformation of the state-run oil behemoth, Aramco. The power dynamics underwent a significant transformation with Mohammed bin Salman's move to centralize his authority starting from the year 2015.

The consultancy firm adeptly adapted to the ascent of MBS and the evolving power dynamics within the royal court. MBS, intent on reducing the kingdom's dependence on oil income, enlisted the assistance of youthful advisors who were enthusiastic about creating strategies that would not only yield significant revenue for consulting firms like McKinsey but would simultaneously strengthen his grip on Saudi Arabia.

McKinsey's pursuit of profitable contracts shows a disregard for the Saudi authorities' transgressions against human rights.

The book details the era when McKinsey's involvement with Saudi authorities coincided with Mohammed bin Salman's ascent to power, marked by abuses of authority exemplified by the 2017 detention of many opponents in the event dubbed the "Ritz purge," and culminating in the horrific murder of Jamal Khashoggi in 2018. The firm's indifference to the clear indicators of authoritarian inclinations in the Saudi leadership, while pursuing more lucrative opportunities, played a role in furthering his tyrannical aspirations.

Bogdanich and Forsythe detail McKinsey's clandestine collaboration with the UK's SCL Group, Cambridge Analytica's parent company, in carrying out sentiment analysis and organizing focus groups for the Saudi government. They reveal that the incarceration of his family members was due to a confidential report that pinpointed online critics, including Omar Abdulaziz. After Khashoggi's tragic death within the confines of the Saudi consulate in Istanbul, top executives from McKinsey gathered with envoys of Mohammed bin Salman at the Ritz Carlton in Riyadh in 2018. The writers argue that the company's tendency to curry favor with MBS reflects a broader pattern of prioritizing monetary profit over ethical values.

Contributing to China's ascent as a global superpower.

McKinsey views China as a crucial future market, recognizing its rapid rise to the position of the world's second-largest economy after the United States by 2010, marking a remarkable recovery from the extended period of economic distress under Mao's rule. McKinsey offered advice to Chinese officials on strategies for recovery after the 2008 global financial crisis and imparted their knowledge to various Chinese companies eager to benefit from the insights of a renowned international advisory company.

McKinsey, however, was not simply advising Chinese companies; it was also serving the interests of China's ruling Communist Party – the very organization that has for decades suppressed freedom of speech and human rights. The book details how the consultancy played a pivotal role in the development of state-owned enterprises that are key to bolstering China's military and economic influence worldwide, operating with direction from China's authorities.

enhancement of state-owned enterprises in China and its impact on the United States' standing in the international marketplace.

The book details the strategic actions taken by the consulting firm to gain a substantial foothold in China. Starting as a modest enterprise in the mid-1990s with a handful of offices and a limited staff, the firm expanded considerably over the next decade, becoming an important sector for the business. The company's growth was largely fueled by securing substantial agreements with enterprises owned by the Chinese state, entities that are integral to the country's economic structure and function under the direction of the Chinese Communist Party.

The writers argue that the productivity of these State-Owned Enterprises was significantly boosted by the strategic advice from McKinsey's consultants, contributing to the rapid expansion of China's economy. The book posits that the actions of McKinsey have played a substantial role in undermining the economic might of the United States and its principal allies, particularly in the context of China's emergence as a formidable manufacturing power and competitor to American economic dominance.

The ethical implications are substantial when assessing the consultancy support McKinsey offered to Chinese officials on their expansive infrastructure and trade project, as well as the strategic plan for China's industrial production goals set for the year 2025.

The authors describe how McKinsey has been a staunch advocate for significant geopolitical endeavors by China, including the extensive infrastructure and economic growth effort referred to as the Belt and Road Initiative, despite apprehensions from Western nations that these activities could undermine their economic strength and reinforce China's autocratic rule. Bogdanich and Forsythe argue that for McKinsey, it was essential to align with the key objectives of its principal client, the U.S. government, particularly in matters related to defense and intelligence, to promote those agendas.

During confidential meetings with clients, McKinsey highlighted the Belt and Road Initiative's objective to enhance worldwide prosperity, while minimizing Western concerns regarding the project's geopolitical intentions. The writers argue that by choosing to work for clients whose goals were at odds with those of the U.S. government, McKinsey invariably faced a significant conflict of interest. The writers argue that the firm's adoption of such strategies casts doubt on whether it upholds ethical responsibilities while chasing higher earnings.

Other Perspectives

• McKinsey's work in emerging markets could be seen as part of a broader trend of globalization, where firms provide expertise to a variety of clients, some of which may have complex political and ethical backgrounds.
• The firm's involvement in South Africa could be interpreted as an attempt to engage with and improve the local economy, which may involve working within the existing political framework, however flawed.
• McKinsey's decision to return fees in South Africa could be viewed as an acknowledgment of oversight and a commitment to rectify mistakes, rather than an admission of deliberate wrongdoing.
• In Saudi Arabia, McKinsey's work might be seen as contributing to the country's modernization efforts, which could have long-term benefits for the population, including improved economic conditions and social reforms.
• The consultancy's engagement with Mohammed bin Salman could be defended as working with the de facto leader to influence positive change from within, a common practice in international business diplomacy.
• McKinsey's pursuit of contracts in Saudi Arabia could be justified as business pragmatism, operating within the context of international norms where companies often engage with governments of varying ethical standings.
• The consultancy's advice to Chinese companies and state-owned enterprises could be seen as a neutral business activity, separate from the political actions of the Chinese government.
• McKinsey's involvement in China could be argued as a form of engagement that potentially encourages market-oriented reforms and global integration, which could lead to more responsible governance practices.
• The support for China's Belt and Road Initiative might be defended as promoting global economic development, which can lead to improved international relations and mutual economic benefits.

The extensive involvement of McKinsey in government agencies and its interactions with authoritarian regimes have prompted worries about possible conflicts of interest.

The writers argue that by advising government entities that also regulate its corporate clients, McKinsey serves as a bridge that connects its commercial clients to key figures within the government. McKinsey sometimes recommended changes in policy and obtained government contracts to carry them out, a process that occasionally bypassed the standard procedure of competitive bidding and included involvement in illegal activities. The writers highlight the unique role the advisory firm plays by engaging with healthcare entities in the US and UK, as well as the counsel it provides to autocratic governments.

Exploring the Medical Sector from Various Perspectives

The authors highlight how McKinsey has burrowed into the heart of the U.S. government's efforts to improve health care, advising the FDA as well as dozens of state governments on best practices for drug approval, streamlining insurance claims processing, and managing programs such as Medicaid. The book written by Bogdanich and Forsythe reveals the conflicting positions McKinsey occupies when it offers counsel to healthcare companies that are regulated by the same agencies.

The writers argue that the consultancy's work with the FDA is a particularly troubling example of its decision to act on behalf of clients with conflicting interests. While advising the agency on methods to make the drug approval process more efficient and cut unnecessary costs, McKinsey simultaneously offered major pharmaceutical companies advice that directly contradicted these efforts. The book delves into the role McKinsey played in Biogen's quest to secure FDA approval for a controversial Alzheimer's drug, as scrutinized by Bogdanich and Forsythe. The organization adeptly executes a combination of proactive strategies and protective measures.

Other Perspectives

• McKinsey's involvement with government agencies could be seen as leveraging its expertise to improve efficiency and policy, which could benefit the public sector.
• The firm's work with authoritarian regimes might be justified as an attempt to bring about positive change from within by sharing best practices and expertise.
• Conflicts of interest can occur in any consultancy firm, and McKinsey may have strict internal policies to manage and mitigate such conflicts.
• The process of bypassing competitive bidding might be due to McKinsey's specialized expertise that few other firms can offer, which could be in the government's interest in certain situations.
• McKinsey's dual role in advising both government agencies and healthcare companies could potentially lead to more informed and holistic advice, benefiting both parties.
• The firm's advice to the FDA and pharmaceutical companies might not necessarily be contradictory but could reflect different aspects of a complex healthcare system.
• McKinsey's strategies and protective measures could be standard industry practice for consultancy firms working with sensitive government contracts.