play_arrow

keyboard_arrow_right

skip_previous play_arrow skip_next
00:00 00:00
playlist_play chevron_left
volume_up
chevron_left
play_arrow

Calling Bullshit

McKinsey: Something to hide?

Calling Bullsh!t December 21, 2022 2473


Background
share close

Our guests

author-michael-forsythe-superJumbo
Mike Forsythe

@PekingMike

Journalist and Author of “When McKinsey Comes to Town”

gHGZpEiW_400x400
Erik Edstrom

@ErikEdstrom

Author and former McKinsey consultant

1635877828502
Rizwan Naveed

 

Sustainability Strategist and former McKinsey consultant

Is the company that prides itself on a culture of discretion hiding more than we thought?

Short Synopsis: 

Stated purpose: To create positive, lasting change in the world.

When recruiting the next generation of talent, McKinsey points to its lofty purpose and promises “wealth without guilt”.  In this episode we talk to some people who have gotten a look behind the curtain who tell a very different story. No one in this episode questions McKinsey’s power or brilliance, but the question that  must be examined is, are those formidable talents actually being used for good?

If you look at the McKinsey website, you could be forgiven for thinking that they are the poster child for responsible capitalism, for ethical capitalism. It’s all about doing good. It’s all about saving the planet.  

But, again, the work that makes them a lot of money, oftentimes, is in contradiction to their stated values as a company.”  

– Mike Forsythe

 

McKinsey’s BS score is

Show notes

Episode Transcript

 

MUSIC: “Chai Beltini – 30 seconds” BY Vermouth

 

TY MONTAGUE (VO)

McKinsey. The enigmatic global consulting firm. Their influence unrivaled. Their talent extraordinary. Their allure irresistible. Their bullshit undetected. Until now.

TY MONTAGUE (VO)

Welcome to Calling Bullshit, the podcast about purpose-washing — the gap between what an organization says they stand for and what they actually do — and what they would need to change to practice what they preach.

I’m your host, Ty Montague. I’ve spent over a decade helping organizations define what they stand for — their purpose — and helped them to use that purpose to drive transformation throughout their business.

Unfortunately, at a lot of institutions today, there’s still a pretty wide gap between word and deed. That gap has a name: Bullshit.

But — and this is important – we believe that bullshit is a treatable condition. So when our bullshit detector lights up, we’re going to explore everything the organization should do to fix it.

MUSIC: “La Naranja Borriana – 1min Speedy” BY Tango Borriana

 

SOT 1: The campaign that Purdue launched when it put Oxycontin on the market, was designed to make doctors think that opioids rarely cause addiction. Now dozens of states and cities have filed lawsuits accusing Purdue of helping fuel the current health crisis with misleading marketing.

SOT 2: I can’t remember the last time the FDA was a friend or the spark for a rally for some of the tobacco stocks, but that’s what we saw yesterday.

SOT 3: Enron ultimately filed for bankruptcy. Approximately 20,000 jobs and 2 billion dollars in employee retirement funds were lost. Many executives were brought to justice, and some of them ultimately ended up receiving prison sentences.

SOT 4: Many Americans are struggling to get by but not everyone. According to the Economic Policy Institute, American CEOs were paid 351 times as much as a typical worker. 

SOT 5: The Department of Homeland Security has redirected hundreds of millions of dollars to immigration enforcement growing the size and scope of ICE. The government has pulled money that was supposed to be spent on the Coast Guard, on TSA aviation security, and on FEMA hurricane relief.

SOT 6: A US intelligence report has concluded that Saudi Crown Prince Mohammad Bin Salman, personally approved the murder of the exiled journalist Jamal Khashoggi.

///

TY MONTAGUE (VO)

Enron. The Immigration and Customs Enforcement Agency aka ICE. Big Tobacco. The FDA. Purdue Pharma. Big Oil, and the Saudi Arabian Government. What’s the thread that connects all of these controversial organizations, governments, and industries? They have all been clients of McKinsey. 

Coincidence? Bad luck? Or is there something about Mckinsey that draws them into these dark corners of capitalism?

/// 

MUSIC: “Single Still – No Trumpet” BY  Vermouth 

 

TY MONTAGUE (VO) 

The story of McKinsey and the story of global capitalism are inextricably linked. The firm consults with heads of state, boards of directors, and CEOs of most -if not all – of the most powerful corporations and countries on the planet. 

You’d be forgiven for not knowing much about Mckinsey. Secrecy is a precious organizational currency. Few people outside of the firm have a clear idea of the full scope of their activities. Few people inside the firm know the full scope either. 

What is common knowledge – for the past hundred years, McKinsey recruits elite talent from only the top-tier universities. McKinsey also sells these recruits on the idea of “wealth without guilt”. To the young, gifted, and ambitious, a job at McKinsey is the ultimate initiation into success – with alumni currently holding high positions in government as well as running companies like Google, Morgan Stanley, JP Morgan Chase, IBM, Disney, and Boeing. To name just a few. 

They claim to be a values-driven firm. Values like practicing high ethical standards, having an obligation to dissent, maintaining an independent perspective, and above all, serving the client first

If you were to visit their website, you’d see that they claim to be a purpose-led company. Their purpose? “to create positive, lasting change in the world.” 

Although that purpose is a little vague – as you listen to this story unfold, you’ll begin to realize, as I did, that because of their power to accelerate the adoption of new ideas across their client base, there is no company better positioned to create positive, lasting change to the system of capitalism than McKinsey. 

So… do their deeds back up their words? Does their value of “serving the client first” mean that every other value comes second? Can we trust any company to be purpose-led when they operate in almost total secrecy?

Flip on your BS detector folks and join me as I talk with three people who are deeply qualified to help us discover the truth to these questions and more  – a New York Times investigative journalist and co-author of the new book “When Mckinsey comes to town” followed by two former Mckinsey consultants who have worked inside the belly of the beast. 

///

TY MONTAGUE 

Folks, I am very excited to welcome New York Times journalist and author Mike Forsythe. Mike, thank you for being here today, and welcome to Calling Bullshit.

MIKE FORSYTHE 

I’m so happy to be here, Ty. 

TY MONTAGUE 

So you and your co-author Walt Bich, have written this fascinating book about Mckinsey. Which I found both fascinating and honestly a little bit scary. What, what moved you to write about this topic? 

MIKE FORSYTHE 

So all credit goes to, uh, my co-author, Walt Bich. He started looking at McKinsey, uh, back in 20 15, 20 16, uh, because he saw that McKinsey’s work, was contributing to inequality. And was, it was such a powerful, secretive firm. So he was pitching to editors back then, Let’s write about this firm, our first bite of the apple, uh, in 2018 was, about McKinsey’s work in South Africa. Uh, but in that story we also mentioned a little bit about McKinsey’s work with ICE, that led to, you know, another chain of events. And we, we just kept writing and writing and we just kept writing. 

TY MONTAGUE 

How would you describe what McKinsey does?

MIKE FORSYTHE 

So, uh, they’re a management consulting company, so more than 30,000 people, started in the US but actually most of their employees are outside of the US now, When you say a management consulting company, they work for the C-suite, the CEOs, CFOs, COOs, and a lot of the time their work is garden variety, cost-cutting recommendations.

That’s what they’re known for, probably the best. You know, they’re the people you fear when they come in and they figure out where jobs need to be cut, you know?

TY MONTAGUE 

Yeah. They’re the efficiency experts.

MIKE FORSYTHE 

The efficiency experts and they have been for, they’ve been around for nearly a hundred years and they’ve always been the efficiency experts, but they do a lot more than that.

Uh, you know, they, they help with, refocusing companies, focusing on new lines of business, they help governments, reorganized departments such as the FDA, for example. Uh, and they also, I think, and this is really important, over the decades, and especially since the 1980s, they have been big propagators of ideas around the world, diffusers of knowledge, so they are very powerful propagators of information.

TY MONTAGUE 

Yeah. They’re almost like the, the global nervous system for the business community, right? Like they, they are the behind-the-scenes transmitter of, of vital information.

McKinsey is an almost mythic brand in consulting. They have a reputation for being, incredibly smart, extremely effective, and intensely secretive. My first question here really is how did you get the access that you needed to even tell this story?

MIKE FORSYTHE 

There’s a lot of ways we did it. One thing that surprised us early on was people coming to us, uh, working at McKinsey or had just left McKinsey to tell their stories. And it took a while, but we realized why, because McKinsey is such a different company from like, say Goldman Sachs or some private equity company where, you know, there’s no pretense when you work there.

You, you’re there to earn money, You’re there to be part of unfettered capitalism if you’re at Goldman Sachs right? But at McKinsey, they lure very idealistic, very intelligent people into the company. Their recruiting pitch is all about making a difference. And they talk in, inevitably in their recruiting pitches, talking about, you know, things you could do to make the world better, you know, with climate or, you know, with health, things like that.

And it’s because of that, that people, when they got there, realized they’d been sold a bill of goods and they came to us and, and some of them came with some extraordinary information. 

TY MONTAGUE 

And this didn’t surprise me to be honest, because, uh, McKinsey does use that technique of trying to, trying to recruit people who really want to make a positive impact on the world and they recruit from some of the best schools around the world, a large group of people both inside the company today, and also people who have left the company who feel some loyalty to it, right?

They joined it for the right reason. They want to kind of protect it, you know, the impression I get from your book is many of them hate seeing when the company, gets involved in, unsavory things or things that are, you know, they know are gonna damage the brand. it almost feels like they come to McKinsey’s defense.

MIKE FORSYTHE 

Sometimes some people, uh, the more senior the people are, the more they come to McKinsey’s defense, it seems. Uh, and it’s the younger people that, you know, haven’t spent their whole lives there or the, the prime of their lives there, uh, who can move on, and do other things that are, are more likely to come to us.

So it, it’s true. I think the majority of the, the whistleblowers we had or the really good sources we had were on the younger side.

TY MONTAGUE 

Yeah. And it was over and over again in the book that the young consultants kind of rose up when there was, you know, malfeasance of, of one kind or another, it’s, it’s good to see that there are internal checks and balances as well.

So you touched on this, but I want to dig a little bit deeper. The company, also claims to be purpose-led itself, and they say their purpose is to create positive enduring change in the world. And so right out of the gate, what do you think about that purpose having written this book?

MIKE FORSYTHE 

I think it’s a very noble purpose but, uh, the whole point of the book is, that they don’t live up to that purpose in many important ways and some of the work that they do does real harm to the world. But, you know, they also have values and, and, that’s the crux of the problem is that their number one value, you know, over the decades has been to serve the client first. 

TY MONTAGUE 

So, um, let’s get into some of the things that really opened my eyes in this book. One of the many unexpected things that I got from it is McKinsey’s role in a number of aspects of, let’s call it late stage capitalism.

So for instance, income inequality. I never thought about McKinsey when it came to that topic. Can you talk about how the firm had a role in the, you know, now vast and growing divide between workers and managers?

MIKE FORSYTHE 

There are so many ways that McKinsey’s had a big role in this, but it started in 1950 and McKinsey had been hired by General Motors, to do a study about, compensation, uh, for its executives. And, and, McKinsey looked at compensation at many companies. Then it was this hotshot partner, young guy named Arch Patton back in 1950.

And, uh, he made an amazing discovery. He discovered that workers’ pay was catching up to executive pay, or was growing faster than executive pay. So the gap between executives and workers was narrowing!

TY MONTAGUE 

Wasn’t big enough!

MIKE FORSYTHE 

It and it, it, you know, this was a time when labor unions were strong. There had been, you know, something called the Treaty of Detroit, where, you know, workers got all sorts of benefits, you know, so that they wouldn’t strike.

So this got spread around from company to company. And, and some companies, executives didn’t like the fact that they were ranked lower than other ones. And it, it started this race to the top where, you know, companies would raise pay for their executives based on these McKinsey’s studies that happened year after year after year.

And this guy, Arch Patton would publish these in Fortune. He’d published these in the Harvard Business Review. So people started knowing, company executives started knowing what people in other industries were making. They didn’t want to be behind. Stock Options started becoming in vogue. Uh, McKinsey did these compensation studies, you know, for, for individual companies.

It became a very big part of the firm’s work. And this guy alone was billing about 10% of all revenue at McKinsey at the time.

TY MONTAGUE 

Yeah, so he built a huge practice and you can, you kind of go, let’s see, let’s who you gonna call? If you want to get a get a raise and you’re a CEO, call call Arch at McKinsey.

MIKE FORSYTHE 

Right, right. It it, yeah.

TY MONTAGUE 

Simultaneously though, McKinsey is as the efficiency expert, showing some of those same companies how to cut costs by downsizing and then ultimately offshoring talent to other countries to drive compensation of workers lower.

MIKE FORSYTHE 

That’s right. So, offshoring was all the vogue at McKinsey in the 1990s. There were McKinsey partners writing books about the benefits of offshoring globalization, you know, McKinsey would just talk about this with endless companies, and they would put slides in slide decks about the, the benefits of globalization, the benefits of moving your work to China from the United States. and so because of their reach in all these corporate boardrooms, they were able to spread this gospel, about the benefits of offshoring. 

TY MONTAGUE 

So, so just to unpack this, McKinsey profits by helping shareholders profit by firing American workers on mass in some cases, or, or firing them and moving their jobs overseas. And then they also profit by helping management profit, by starting an executive pay practice that drives CEO pay into the stratosphere.That’s quite clever and it leads to a second eye-opening aspect of the book. I learned that in multiple industries and engagements, McKinsey often profits from working for both sides of an issue. I was, I was really struck by, Uh, you know, their relationship with not only big tobacco who they worked with for years, but also their relationship with the FDA Center for Tobacco Products, which is responsible for regulating big tobacco.

And they worked with those entities as I understand it simultaneously. They also consulted with Juul, which at the time claimed to be a smoking cessation product as JUUL wound up marketing their product to teens and thereby addicting an entirely new generation to nicotine. And, and so, you know, this, this strategy of, of working multiple sides of the problem has, has netted the company massive fees over the years, has it not?

MIKE FORSYTHE 

It really has. almost since the beginning of McKinsey, they’ve been happy and they’ve, they’ve made it clear that they work for multiple companies in the same industry for, so for example, they could work for Ford, GM and Chrysler at the same time. .

But what, but what you said is, You know, on a different level entirely. When McKinsey is working for both the regulator, you know, with the FDA being the poster child, and then the companies that are actually regulated and, you know, and as you pointed out, uh, the, the idea that McKinsey was working, um, for Big Tobacco, and they only stopped working for Big Tobacco in 2021, 

TY MONTAGUE

Yeah, and I guess, I guess somehow this is all legal question mark?

MIKE FORSYTHE 

So that is a question. It, it appears to be legal. you know, McKinsey, uh, had to pay more than 600 million are settled with these state’s attorneys general investigations last year into their work with opioid makers. They in right. Purdue Endo, uh, Mallin, several of the opioid

TY MONTAGUE 

J&J.

MIKE FORSYTHE 

J&J that they admitted no wrongdoing, uh, you know, and, and, and that, and that’s a constant theme.

They’re admitting no wrongdoing. Uh, and, uh, you know, certainly Congress has been really looking into this conflict as well. There were some very testy hearing back in April, uh, when, uh, members of Congress were asking, uh, the head of McKinsey, this guy named Bob Stud, Fells, you know, point blank, you know, how can you work for the fda? And, uh, you know, and, uh, the, the regulated companies, the, you know, like Purdue at the same time. Now, of course, he would say, Well, the work we did for the FDA wasn’t specific to any of these companies. So there was no conflict.

TY MONTAGUE 

Right. Yeah. So legal but, or potentially legal.  Would you consider that to be ethical?

MIKE FORSYTHE 

No, no, straight up no.

TY MONTAGUE 

Yeah, me neither.

MIKE FORSYTHE 

Know, and, and, Right, and one thing we discovered is we talked to some people at the FDA or former people, senior people, Hey, did you know that McKinsey was also advising these drug makers, these tobacco makers at the same time they were advising you and they didn’t know

TY MONTAGUE 

Yeah, they were surprised, which is terrible. Right. But that is, you know, that is the, you know, and I’ve always thought as the, as McKinsey’s secrecy is a little bit of just a, a, a kind of marketing ploy to create mystique, but it does seem like it’s, it’s actually a really important part of their business model because if you have total secrecy on everything that you’re working for, both internally and, and externally, you can get away with stuff like that.

MIKE FORSYTHE 

That’s right. You know, and, and you know, we don’t know there, we only know what we’ve uncovered. Uh, but uh, you know, there’s, there’s lots more secrets out there, I’m sure. Uh, and you can do a lot of things if no one knows what you’re doing. 

TY MONTAGUE 

Right. There was another story that you told in the book that, I don’t know whether this is working two sides of an issue, but I did find it cynical. You tell the story of Dixon Pinner, who is or was McKinsey’s head of sustainability at the Aspen Ideas Festival, talking about the pressing need for corporations to take quick and dramatic action on climate change.

MIKE FORSYTHE 

Yeah.

TY MONTAGUE 

That’s great at the Aspen Ideas Festival. but this is a company that worked for years and continues to work with some of the biggest fossil fuel companies in the world. 

MIKE FORSYTHE 

Right. So we called McKinsey out on this in a story in the New York Times, uh, a year ago. And it’s a, you know, it’s a big chapter in our book. Uh, again, if McKinsey was working with big oil, you know, the gas companies, the coal miners to reduce their carbon emissions, you know, that would be laudable. And Dick and Pinner, uh, you know, he’s, uh, like he’s head of the sustainability for them.

He’s, you know, he, he, he knows about climate change. He, he can really do a great presentation showing how urgent the problem is, and he is done. Lots of great reports. The problem is, I tell you, we did this story back in, uh, a year ago, and McKinsey is unapologetic about its work with these companies. What we tried to do, and it’s in the book, is to show that a lot of their work with these companies is, has nothing to do with cutting their carbon emissions. It has everything to do with making them a more profitable and more productive coal mining company, or oil company, a gas company. it’s, And yet, and yet on their website, All these studies that McKinsey’s doing all this, these words about, you know, committed to, to protecting the planet, committed to reducing emissions. And yet at the same time, these big clients that they’re working for are, are, you know, some of the world’s biggest polluters.

TY MONTAGUE 

Yeah. Some of the data that you have in the book is incredible. Let me just read a bit. This is a note I wrote here for myself for, for a firm committed to protecting the planet, McKinsey counts 17 mining and fossil fuel companies among its biggest clients. Collectively, those clients have earned McKinsey hundreds of millions of dollars in recent years since 2010, McKinsey has worked with 43 of the hundred companies that have pumped the most carbon dioxide into the atmosphere since 1965. These 43 companies were responsible for 38% of the entire planet’s carbon dioxide output in 2018, and Chevron number three on the list. McKenzie 50 million in fees in 2019. Um, so they’re hardly not in the carbon business. And for them to make any claims about being pro sustainability is seems ridiculous to me and a little dangerous.

MIKE FORSYTHE 

It does, and I tell you, you know, they’re, they were apologetic about their work with opioid makers. They were apologetic about their work in South Africa, but they are not apologetic about their work with these carbon emitters. and that’s not to say that McKinsey doesn’t do good work, you know, on sustainability. They do some and, uh, and they do work with some great green companies and, and that’s a fact. But, they also, do you know what we outline the, these work with these big polluters.

TY MONTAGUE 

You know, one of the things that you point out in the book is that McKinsey is really good at spreading ideas, and they’ve done it many times over their, history. And, and you know, we’re now feeling what I hope is a new day dawning in capitalism. And McKinsey could be tremendously powerful if they decided to really get behind, for instance, conscious capitalism.

MIKE FORSYTHE 

I couldn’t agree more. One of the things McKinsey does really well is hire really smart people who will work their butts off. And if those people can be harnessed, to, consistently do things that are good, and will make the world more sustainable and more equitable, uh, you know, all within the free market framework, which is, is not a contradiction. then, hats off to them if they can do that.

TY MONTAGUE Let’s touch on another, topic that, that is contained in the book, which, which I did not realize, which is McKinsey’s, work with authoritarian governments. Um, you tell two stories about this, McKinsey’s work with the Chinese government and their work with the Saudi Arabian government. And it just struck me that, McKinsey is, is very good at finding growth industries and attaching themselves to them, and authoritarianism seems to be spreading around the globe. Is this the new growth industry for McKinsey?

MIKE FORSYTHE 

So, um, after we wrote about their work in China, after we wrote about their work in Saudi Arabia, McKinsey did say that they’ve changed the way they select clients, and now they say they, you know, they will not work for, the defense ministries, Justice ministries, the police, interior ministries, of authoritarian countries they say that now, But a lot of the harm and a lot of the power in authoritarian countries is not in those ministries. It’s in the Ministry of Economy. For example, if you’re working to make an authoritarian country like Saudi Arabia, more robust, the, theocratic autocratic house of Saute, you know, more sustainable. you do, you’re doing that through the Ministry of Economy. And, and that’s what we’ve found, that that work is still continuing. and, uh, you know, McKinsey’s still in Saudi Arabia. And in China, we also discovered that McKinsey for a time was a real champion of some of these Marquis Chinese policies that were meant to burnish Chinese power throughout the world.

TY MONTAGUE   

They have come out publicly and said they’ve changed their ways with regard to, for instance, the Chinese government. Are they explicitly not working with Chinese government-owned or run companies?

MIKE FORSYTHE 

No, no. They have not said that at all. So they, uh, They are still working with some of the, biggest Chinese state-owned companies. And the, um, what we looked at in, our book is the 96 Chinese companies, which are the, the centrally, managed state-owned companies. The, they’re called the J This is the, these are the, companies that are that basis for Chinese state power. And so there are many of these companies that, McKenzie works for. And so, you know, in fact, we never found them really working for the, you know, the interior ministries, the defense ministries in these countries.

TY MONTAGUE  

But they don’t have to work with those ministries necessarily to be engaged in work that’s in direct opposition to, for instance, the interests of the United States.

MIKE FORSYTHE 

That’s right. So, you know, one of the, the areas we, we looked at was, uh, their work for a company called China Communications Construction Company, which builds those islands, those artificial islands in the South China Sea that, you know, uh, some people fear will turn that area into just a big Chinese lake.

We know that the Pentagon is, really concerned about this. and McKinsey obviously works for the Pentagon as well. and so there’s another contradiction there. 

TY MONTAGUE 

Yeah. Yeah, it’s, it’s odd. And I guess, you know, this has to do with the perspective that you take. My guess would be, and, and you keep me honest here, the way they defend that is to say we’re a global company. We’re not a US company. We don’t, we don’t have anybody’s particular interests in mind. We want to help the people who pay us to, advance. agenda, whatever that agenda is.

MIKE FORSYTHE  

That may be so. But I, I’m sorry. You know, if you’re working for one client and they’re, the interests are opposed to another client, especially if that client’s, you know, the US government, and if the work that McKinsey’s doing is in contradiction to, national security, I think that’s something that maybe needs to get called out.

TY MONTAGUE 

Okay. So other shocking stories, and we’ll just touch on these. McKinsey’s role in securitized debt. You know, this idea of, of turning debt into essentially a stock that other people can buy, or a security that other people can buy to get debt off your books, which is, you know, in, in many ways led directly to the housing collapse and bankrupting at least tens, if not hundreds of thousands of Americans.

They did the work at Purdue, literally using the word turbocharging sales of Oxycontin, in the middle of, the opioid pandemic. It was obviously already clear that this was a problem when McKinsey stepped in and tried to help Perdue Pharma sell more of this stuff. Which leads to, you know, a question that I have about this company, which is, is there a client you think they would not take on?

MIKE FORSYTHE 

Um, I am sure there are clients they would not take on. and you know, we don’t hear about the clients they reject. McKinsey says they actually turn down a lot of work. I don’t know what that work is specifically. 

TY MONTAGUE 

Yeah. Okay. So just to, to round this up a little bit, I found myself as I read the book and listened to all these stories, having a lot of thoughts about this. McKenzie in one way or another has been at the scene of some of the most egregious examples of capitalism run a muck throughout, uh, through over the years.

And throughout the book, you pointed out that in many cases the strongest criticism came from within. Most often from young consultants who joined to make a positive and lasting change on the world, like the sign says, and were shocked by what they discovered when they got in there. And you know, this is part of a broader movement among young people who are demanding change.

I guess my question is, how do you think McKinsey stays relevant in that changing landscape and, and, and continues to win with, with talent?

MIKE FORSYTHE

If you look at the McKinsey website, you could be forgiven for thinking that they are, you know, the, the, the poster children. The poster child for responsible capitalism. For ethical capitalism. It’s all about doing good. It’s all about saving the planet. all these things. So, on the surface they seem like a, a very ethical company. But, again, the, the work that makes them a lot of money, oftentimes is in contradiction to, their stated values, as a company.

TY MONTAGUE 

Well, in addition to being purpose, claiming to be purpose-led themselves, they also claim to be helping clients make the transition to being purpose-led today. 

MIKE FORSYTHE

It’s a big way to make money. It’s.

TY MONTAGUE 

It is, I just question their credentials.

MIKE FORSYTHE 

No, we certainly do. But you know, they can make a lot of money helping, companies with their, environmental, these ESG goals or, you know, that’s, that’s a big way to make money. and so McKinsey’s advising companies on this,

TY MONTAGUE 

Yeah. Okay. So one other, uh, quick area that I wanted to delve into is values. They have numerous values and they all sound as values tend to really, really great. But there are three that I wanted to probe on. The first is preserving client confidences.

You know, they’re renowned for secrecy. they claim that it’s for their clients. But the other revealing thing about your book is that this policy of total secrecy has been incredibly profitable for them. And I guess my question is, do you think that can endure, you know, secrets are just harder to keep these days, so do you think that policy is gonna change?

MIKE FORSYTHE 

Uh, I don’t think it’s gonna change. I think it’s baked into McKinsey. and some of that is legitimate, Ty because, for example, if they have trade secrets that they learn from a company, they can’t reveal that. and so they have to be trusted to keep those secrets. but, it is, becoming easier in some ways, through lawsuits, through whistleblowers, through very idealistic young people who, just, they’re not gonna take it anymore. and, uh, they want to work for an ethical company.

I do believe, and you know, that it does depend though, on continued attention by journalists, if there’s not attention paid to these companies, then I think that secrecy and especially the malign aspects of that secrecy will continue you.

TY MONTAGUE 

Another value observe high ethical standards. How are they doing here?

 MIKE FORSYTHE

Well, I think, uh, you know, there’s some, there’s some issues there. 

TY MONTAGUE 

I guess the real question is what happens when this value contradicts either the secrecy value or the firm’s profitability? 

MIKE FORSYTHE 

You know, lots of companies have values and mission statements, and usually they, they’re really meaningless, right? I do think McKinsey’s different. Um, they really take this stuff seriously. They, you know, they’re, people are always talking about values at McKinsey. They have a values day, you know, they stand down and talk about values every year. And you see it in email after email, after email to these, you know, the, another value I’ll have to say is the right to dissent. The obligation to dissent. If you see something wrong, you say something. And that, that is a value that’s invoked a lot. And that’s helped us write our book because of these incredible emails that these young, McKinsey associates are writing, for example, about their work with ICE, uh, you know, immigration and customs enforcement.

And so, There’s that value. But, you know, kind of like with Lord of the Rings, where there’s one ring, you know, that rules them all. You know, one ring that binds them. The, the one value that is above all the other values is the, client interests come first. Client interests come first, and, but that’s a, if your client is a bad actor and you are working, you know, unstoppably to help that client.

TY MONTAGUE 

Yeah what is your responsibility then in the world, Right? Do you have none? 

MIKE FORSYTHE 

I mean, so, so, yes. Um, the, obligation to keep your client confidences and to put the client’s, know, interests above the firms, can lead you to, basically doing things that, from a societal point of view are just unethical.

TY MONTAGUE 

Yeah. Okay, here’s a, here’s a really self-serving question for you, Mike. you know, you’re obviously a professional journalist and we’re obviously amateurs at calling Bullshit. We just follow our nose and so far our notes has led us to do individual episodes on JUUL, BP, Core Civic, all of which whom are mentioned in the book, and the FDA also in the book. And I was just blown away to discover that the common denominator between all of those entities is, is McKinsey. What do you make of that?

MIKE FORSYTHE 

They’re everywhere. they’re, they’re absolutely everywhere They work, you know, for all these companies and they work for all these government agencies. And, uh, so if you scratch the surface at a lot of companies, you know, you’ll discover McKinsey was there.

TY MONTAGUE 

Another thing that I found myself thinking over and over again how little I understood about the ways in which the world that we all live in today has been shaped by this one firm. And it’s easy to, really make up a fairly scary story about their impact by connecting a few dots, it kind of, if I told you the story, it would go kind of like, well, the relentless focus on helping corporations externalize cost, right? Like pollution and, also by downsizing and offshoring talent and advocating for executive pay has led to the climate crisis and also incoming equality, as well as the destruction of the middle class, which leads to depression and anxiety in, in the devastated middle class and political polarization, which leads to the opioid crisis. And the rise of authoritarianism. 

So we can’t blame McKinsey for this whole mess, of course. But maybe?

MIKE FORSYTHE 

We got started on this because of the feeling that, so many of the problems in America, that McKinsey, had a role in this. What so many McKinsey consultants and former consultants say, is that McKinsey’s an accelerant.

Several people have used that word. They’re an accelerant. they didn’t invent asset securitization, but they spread the gospel. They didn’t invent offshoring, but they spread the gospel. They didn’t invent shareholder capitalism, but they spread the gospel.

TY MONTAGUE  

Yeah, I think that’s, that’s a, a great, point, and it’s a great way to think about them, you know, for, for better or worse. okay. So just a reminder, McKinsey’s purpose is to help create positive enduring change in the world. And so Mike, I, I’d be interested in, in hearing if. We’re able to give them advice on how they could change to better live that purpose. Like what would you tell them?

MIKE FORSYTHE 

Okay. You know, I’m not a philosopher and I don’t play one on tv, But when you see unethical behavior, you know it, you know it, when you see it, you know, it doesn’t take a genius to know that you shouldn’t be working for a hospital to extract money out of poor people. You shouldn’t be pushing opioids, you shouldn’t be working for big tobacco.

You shouldn’t be working for the Saudi government to make them more sustainable. Or with Chinese government ministries. it doesn’t take a genius. There are gray areas, of course. but, they need to have a lot more of, and I don’t use this word a lot, but a lot more eq, a lot more emotional quote.

They don’t have that now. They’re so focused on their spreadsheets and their slide decks that in so many cases they lose sight of the big picture. And that’s the, the purpose of their work and the ethics of their work. so they need to be much more conscious about that. 

TY MONTAGUE 

Mike, last question on this show, we have a tool, or to use a McKinsey is a technology called the BS Scale to measure the gap between word and deed, it goes from zero to 100, zero being the best, zero Bs, and 100 being the worst total bs. So on that scale, how would you rate McKinsey?

MIKE FORSYTHE

So this goes against all the instincts of, as a journalist, to give you this number. But I’m gonna, but I’m gonna do it. I would have to give them a 90. so they’re, they’re way up there, on the bs. And, you know, I think our whole book has been calling on out the bs, at McKinsey.

They do lots of great work. They have lots of great people. So many people at McKinsey, I, I am their friends. I would, you know, they’re, they’re great people, but on such important, big issues around the world, they really fall short and, and it clashes so much with what they say in public on their website.

TY MONTAGUE 

Mike, thank you so much for being here today. This was an awesome conversation. And, uh, thank you for the work that you’re doing. Please keep it.

MIKE FORSYTHE 

Thank you very much, Ty. It was a real pleasure.

 

TY MONTAGUE (VO) 

Folks, it is time to make the call: is Mckinsey really “Creating positive and lasting change in the world?” Based on what I’ve heard so far, I’m calling Bullshit. If your purpose is to create positive lasting change then you have to help the world think long-term, rather than continuing the fixation with the latest quarterly results. If you’re going to create positive lasting change in the world you have to decide that there are good client dollars and there are bad client dollars and you have to learn to say no to the bad client dollars. And if you want to create positive lasting change you have to have the courage to take a stand on issues that matter to the next generation of Mckinsey consultants and Mckinsey clients. 

Mckinsey has had multiple chances over the years and especially lately to make some of these changes. So far they have failed. 

But as you know, we believe that Bullshit is a treatable condition. So right after the break we’re going to talk with two ex-Mckinsey consultants about actions the firm could still take to turn things around. Stick with us. 

TY MONTAGUE 

All right, folks. I am very excited to introduce today’s experts, both ex-McKinsey consultants, Rizwan Naveed, and Eric Edstrom who are gonna help us help McKinsey to better live their stated purpose. Welcome to Calling Bullshit.

RIZWAN NAVEED 

Pleasure to be here.

ERIK EDSTROM 

It’s great to be here.

TY MONTAGUE 

So Rizwan, please, tell us a little bit about your background, about your work at McKinsey and, and also what made you decide to, to leave the firm.

RIZWAN NAVEED 

I’m a professional with about a decade of experience in the broader natural resources space. About half of that, or five years at McKinsey, where I was a consultant and then an engagement manager in our electric power and natural gas practice, which is a subgroup of our broader global energy and materials group, My job at McKinsey as an engagement manager was to lead teams and work with the senior C level, leadership and board level clients in the power and sustainability space. I’ve worked on both, highly emitting and decarbonizing clients. but the latter part of my career, I would say, was almost exclusively focused on energy transition topics.

At this point, maybe it’s worth talking a little bit about the context surrounding my departure, For myself, I try to work within Paris line trajectory, to articulate a different way to help these clients decarbonize and to articulate, that the farm should measure, disclose, set an aspiration for reducing its client emissions, and take steps gradually over time, to calibrate such that it’s edging this portfolio towards Paris and line trajectory

 I couldn’t fully explain why we were running into, leadership, not giving us time or not fully engaging or various explanations as to why this is complex and needs a second look. And after sort of months of being stuck in this, Myself and a few other colleagues who are quite motivated, articulated in a letter to senior leadership that we need to do more on our client emissions.

That we carry immense risk as our clients irrevocably, alter the arts environment, with their emissions. And we, you know, open this to an audience inside the firm globally, we got 1100 signatures, uh, within a week, I believe. And then suddenly the same folks who couldn’t give us as much time were very attentive.

TY MONTAGUE 

Yeah, that’s a huge number of people. Just contextually, how many people work at McKinsey?

RIZWAN NAVEED 

I would say around 30 to 35,000 Um, that letter in functional terms also went nowhere. After months of this, you know, having seen the, frankly very uninspirational response, I resigned and articulated in an email to senior leadership copying, the majority of our sustainability practice globally, Whereby I essentially laid out the case that we do have some responsibility if we take credit for our impact. We are also associated with the negative externalities of that impact, and we cannot profess to the world and shout to the rooftops that we are the greatest private sector catalyst for, decarbonization globally while continuing to serve. Easily the worst polluters on the planet that are not on even on a trajectory, and essentially resisting or outright refusing to institute even the most basic modicum of measurement, disclosure, target setting, and policies.

TY MONTAGUE 

Right. I, I, I think that context will be very helpful for people and it’s, it’s hard to argue with your logic.  So Eric, just as Ruwan has done, can you tell us a little bit about yourself and also the situation that you found yourself in that caused you to to move on from the firm.

ERIK EDSTROM 

So I grew up in Massachusetts and my first career was in the military. I attended West Point and deployed to direct combat where I led troops in Kandahar Province, Afghanistan, and after that was part of the honor guard where I was the presidential escort platoon leader during the Obama administration from 2010 to 2012, I realized that the military was not sort of the public service Good, especially that particular mission – the war on terror

TY MONTAGUE  

Mm-hmm.

ERIK EDSTROM 

Service is not an absolute good, that I wanted to find a different way to apply myself to the, you know, my, my vocation and, and the world. And so I attended Oxford and did a dual degree doing an MBA in a master of science studying climate change. And I moved to Australia. so I joined McKinsey in 2018 and while I was there, I found that, The projects that were available were not anything like what were advertised, and rather than what you might see on a McKinsey website, which talks about vaccine, cold storage or, renewable energy, that in practice is far and. but in between. the difference of course between sort of puffy of any business where they tried to make themselves look like number one, and we have the best flavor, was very different.

With, McKinsey, you, you’re actively saying that we’re taking a very positive. and that they’re hanging their hat on the notion that this is going to be something that we’re gonna work on. And to set the stage. You know, we went on a firm offsite to Port Douglas in the Great Barrier Reef. And, uh, the consultants would go out for a day trip and go snorkeling to look at the coral reefs, which were actively dying and then they would return back to work where they would help increase extraction at a thermal coal site. And I remember hearing people say stuff like, Well, at least you know, we got a chance to see it before it, it died out. And it was basically, through our own work. Or the firm’s own work rather, that it was making the likelihood of a sustainable future ever harder to achieve.

So that’s sort of some of the stuff that I was, passionate about, and it, it, it, you know, it was more than just the, the work and acknowledging that McKinsey is an amoral institution. They’re only doing what earns them dollars. that’s not necessarily a bad thing if they advertise themselves as such, 

TY MONTAGUE 

Yeah, exactly. That’s, that’s a key, belief that we have on the show is it just needs to do what it says on the label. Right? And, and if you’re transparent about just wanting to make money, we’re fine with it. But it’s, when you say that your purpose is to help create positive enduring change in the world, and then your activities belie another agenda,

ERIK EDSTROM 

Absolutely. So the apex of the experience of sort of dissent within McKinsey to try to realign, uh, the values of the firm were at values day in 2019. And so every year McKinsey gets together to take, you know, a hot wash, look at their values and say, Did we live them this last year? Where did we fall down? Where did we come short? And what might we do to improve our values as a company, which is a great thing. I was in the audience and the senior partner responsible for the Asia pack. Practice for Australia and New Zealand came up to the microphone and said like, our values need to continue to evolve as the sort of atmosphere and, and what society expects of us continues to evolve. And he said something to the effect of, we should no longer be serving clients that kill people or cheat their customers.

And I raised my hand and amongst an audience of 500 people was like, How do you reconcile this with what we’re doing with, for instance, the military, that these actions would be considered state terrorism. Were not legally at war with these countries that were actively bombing, and yet we continue to serve these clients.

And so I, I also, you know, that, that didn’t get me a lot of, um, Positive attention. Um, and in my leaving email, I articulated these same arguments, not releasing any client names as I have not mentioned any client names in this discussion. And I was banned from the, uh, McKinsey Alumni Network. So, this is a, that I think has only happened to other people that were insider trading, for instance.So I had the same level of response for, challenging McKinsey’s client service record, as would an insider trader. 

TY MONTAGUE

And that seems counter to McKinsey’s culture. I mean, I’m, My

RIZWAN NAVEED 

Not just culture Can I hop in there real quick? So it’s not just counter to the culture, the firm. Aided policy to policies. One is the obligation to dissent this notion that if you are a dissenter, you not only should feel supported to speak up, but you have an obligation to speak up, which I presume Eric felt.

And then the second policy is, you know, this policy of non-retaliation, which also was not applied. And I think it’s important to read the intentions in terms of the actions an entity takes and not in terms of what it says. in this case, and in this case, uh, one can derive from the actions that, you know, the, the firm is not open to certain types of dissent and does not see certain types of retaliation, as, inappropriate.

TY MONTAGUE 

That, that tells you a lot about, uh, the actual culture of the company.I appreciate, both of those stories a great deal and, our, our take on, on that kind of thing, We call it bullshit. a gap between word indeed. And we also believe that that bullshit is a treatable condition. but it has to be addressed through action.

And so that’s what we heard really today to talk about. Um, Is to get into some ideas to bring McKinsey’s actions more closely in line with its stated purpose. so I wonder if I could ask you Risan to lead us off in, in a couple of minutes or less. What would you tell McKinsey Global managing partner, Bob Stern, Fells, or, or other McKinsey leaders to change at McKinsey to better live their purpose, which is just to remind folks to help create positive enduring change in the world.

RIZWAN NAVEED 

In my opinion, asking Bob, Hey, you know, you should do these things. We already did that. So in my opinion, the question to ask really is what will society do? What will states and regulators do is just trust us going to cut it.

Should privately owned professional services firms be exempt from a missions measurement or disclosure just because of their choice of financing? So, the question is, what will climate-focused organizations do from the UN Climate Compact and non-profits? Are they willing to continue to engage, the services of firms? knowing full well that they have these contradictions and conflicts of interest in their portfolio? What will governments do?

What will new hires do? So to Bob, I would say, what market signals is he waiting for? What’s more surveys that show that this is the number one concern across alumni, current students, current employees with regards to client emissions?

Uh, is he waiting for a lawsuit? Uh, will that be too late? like I would ask those questions because in my opinion, society needs to subject the firm to material consequences and disclosure, and then the firm will be incentivized to act.

TY MONTAGUE 

So, to paraphrase your, reply to this question, McKinsey isn’t or can’t fix itself, and so others must fix it. Is that fair?

RIZWAN NAVEED 

I mean, we can simply derive that from the actions they have taken thus far.

TY MONTAGUE 

Right. Okay. Um, that’s bleak. But I, I understand, why you would take that position given the story that you’ve just told us. So, fair enough. Eric, any thoughts about that, 

ERIK EDSTROM 

I mean, I think R one is spot on, that the firm is going to respond to the environment in which it exists. If it’s no longer profitable with the calculus that they do to continue serving the, the, these clients, they will stop. And what are the costs? Well, the firm doesn’t manufacture anything. McKinsey doesn’t produce any hardware. They rely on people to do the work. If people stop showing up to apply to McKinsey and say, like, I wanna work at a top-tier consulting firm that isn’t turbocharging the climate crisis, Bob will get the message. Right now, the, the book that was released by the two New York Times reporters is effectively a reputational hand grenade, and they pulled the pin and they handed it back to Bob. Has decided to sit on it. Um, the, the, the question now that the world knows some of the negative externalities that they multiply is, what are they going to do about it? one of the quotes in the book from a former senior partner talked about it effectively. long-term stupid to continue these practices.

TY MONTAGUE

I mean, this is the thing. McKinsey’s a business consultancy and it says it’s looking to make enduring change in the world. So it has this long-term view, but it’s, it’s, it’s giving clients bad advice. 

ERIK EDSTROM 

And when you’re talking about being a, a great place to retain, exceptional. Um, if you ask any Gen Zer, do you wanna work at a company that knowingly is making the most important issue facing the planet worse? What are they gonna do? So I, I, you know, hope that this gets out to all those undergrads at Princeton and MIT and Cal Tech and University of Michigan and Georgia Tech. And when they’re thinking about what they want to do, are they in the interview room going to ask that associate partner, What are you guys doing about this? And are you continuing to serve these clients? They will get the message and they will change.

TY MONTAGUE 

Yeah, I agree. thank you for that. And, Eric, just directly, what would you do to fix McKenzie?

ERIK EDSTROM  

What they will do is respond to market forces. What I hope they do, would be to fix themselves, as you might. Hope for as well, independently and separate. for starters in a, first responder sense, stop the bleeding. So stop serving clients on topics. And this is the big distinction. It is not an objection to serving. fossil fuels and coal companies, it is serving fossil fuels and coal companies on things that will make climate change worse. And that is the distinction that needs to be pulled out of Bob’s straw man fallacy that he published in the Wall Street Journal, where the snuck premise, which no journalist has the courage to look at, is that in his comment, the snuck premise is like, we go to the extractive industries because that’s where the benefits could.

Well, the, the question within that is when you go to those clients, what are you doing? And the answer to that question is very unsavory. And so that is what needs to be pulled out. So stop the bleeding in the sense of stop serving clients that are, we know, go on a four-degree trajectory, stop serving them on either a business as usual projects to help them enable that four degree strategy or worse.

Um, have them do. Basically, work that is turbocharging the problem and, and making it worse.

RIZWAN NAVEED 

I also want to make clear, it’s not that forces within the firm are not trying to drive the change. There are many, many people who struggle with this, who are advocating, uh, for the firm to do more on this. So, I am hopeful that this disclosure, this attention provides them the fact base that they need to. Progress things. McKinsey does incredible work helping clients decarbonize. We are, I would say the, in the sustainability practice, quite specialized in that. The question is, can we, can we continue to be able to do that, with knowing what we know as reported in the Times.

ERIK EDSTROM 

The, the points that Rizwan and I are making, if I can put words in his mouth, is that McKinsey does a lot of good and there is a lot of stuff that is, not inherently immoral. You know, if you look at, if, if you look at the portfolio of clients and the type of work that I would see coming across for projects, a lot of it is pretty humdrum corporate stuff.

How do you improve second-line risk at a health insurance company? How do you, offshore pet food to another country so they don’t have to pay high taxes in this country? so there’s a lot in the middle that’s just, this is just business work. but it is in some instances, whether we’re talking about opioid makers, whether we’re talking about turbocharging, the climate crisis, or helping, the, the defense industry at times when the wars in which they are fighting are indef. 

TY MONTAGUE 

Excellent. 

ERIK EDSTROM 

Uh, those are the topics that they should take a harder look at. So this isn’t a wholesale, you know, the consulting industry is broken completely, but there are aspects that are broken and it leads to really horrendous and dreadful second and third-order consequences.

TY MONTAGUE 

Alright. My turn, from, the naive perspective of not having been in the belly of the beast.  I, I truly believe this, that we are at an inflection point in capitalism, and I think that the form of capitalism that we have practiced for, you know, the last, I don’t know, five decades I call predatory capitalism, but a, a, a gentler name for it would be shareholder capitalism. You know, this idea that the sole purpose of an organization is to enrich shareholders.

That idea needs to go. I believe in a new, form of capitalism that’s now referred to sometimes as stakeholder capitalism that acknowledges that instead of existing exclusively to enrich shareholders, corporations actually exist to serve multiple stakeholders, their employees, other members of their supply chain, the communities that they do business. Um, as well as the planet and, and I, it is just a fact that there is no company better positioned to lead capitalism in this direction than McKinsey. taking a, an optimistic point of view here, McKinsey has the biggest opportunity of the firm’s existence sitting right in front of it to truly live its purpose and help all companies everywhere see that we are.

Like really at a, at a turning point for humanity. and the challenges that corporations face today to make the changes needed to save all of us are really complicated and really difficult. take for example, sustainability. Just the task of remaking global supply chains to achieve a truly circular economy is work that no single company could possibly take on alone.

No client can do that alone. So who would you call to do that work? only a company like McKinsey could help its clients. Truly collaborate to take that on. And so let’s imagine for a second a world in which, in which McKinsey pivots to taking responsibility for helping all companies everywhere actually make this shift.

That would be positive. It would certainly be enduring. And as both of you have pointed out right in the war for talent, McKinsey would win hands down with that strategy. and the alternative is, is for McKinsey to cynically continue to mouth the words about purpose and being purpose-led while just continuing business as usual, helping companies maximize short-term profitability.

And that’s definitely not positive, and I honestly don’t think it’s going to endure either. Thoughts on that?

RIZWAN NAVEED 

So, I appreciate the, the, the framework and I would say, you’re, you’re totally right, right? the sort of freed menes, neoliberal era that we have lived through that has wrought the things that we see today. You know, I, I don’t talk to many people who don’t think that, you know, things are working really well and like, you know, stuff is awesome.

Everything is awesome, and I don’t talk to a lot of people like that. I think the vast majority of people I speak. You know, more or less understand that this sys, this sort of system of incentives is not working. It leads to a lot of the externalities we’ve spoken about, in this conversation. And, you know, there’s an awareness that is changing.

That said, I, I take issue with sort of adding prefixes to the word capitalism, as that changing sort of the core structure, um, of how we organize our society, right? Capitalism is capitalism. it operates under a system of incentives. Until you ascribe the incentives, it cannot function.

So to me, the question is what will create the structural incentives? I’ll give you a specific example. There’s quite a lot of, bluster with regards to climate, and sustainability. You’ve talked extensively on your show about, greenwashing. If you take, for example, the list of, entities that have committed to a science-based target, just count the amount of fossil fuel companies, I think you wouldn’t even get to 10.

 the vast majority of those companies are food, beverage, and consumer companies. Why? Because consumers are far more aware and are creating the consequence where they’re desiring this change. I think such consequences do not yet exist in a material fashion for fossil fuel industries. If in fact, we see the opposite.

You see the Ukraine war, you see Germany that sunset. Its nuclear plants in after Fukushima. Now Repowering coal plants, you see you. Record profits being posted by all and gas companies. In fact, I would say we’re going in the opposite direction 

Do we really expect a private sector, professional services firm to go to the sea levels of hydrocarbon entities and to inform them that they should decarbonize when they’re posting record profits do not see oil prices going down and McKinsey or others entities like it, you know, have the chance of making exceptional amounts of fees from such work.

TY MONTAGUE 

You’re, you’re saying my idea is, is naive and I, I acknowledge, that. However, would you acknowledge That if McKinsey is in the business of trying to help actually save the oil companies and the coal companies that they are consulting for, that it would be better advice to begin a, a transition off, away from fossil fuels as fast as they possibly can because it will take them a long time to get there and we don’t have a long time.

And the alternative is, that Government steps in and buys them, you know, essentially turns them into government utilities and then shuts them down. Right? Like, or, or do you think we’re just gonna spin off the edge of the cliff with capitalism running at full speed? Like what, what is the alternative?

RIZWAN NAVEED

 

I do believe that a combination is needed. Um, I think the private sector needs to see that eventually there are things that they will have to contend with. So what position would they like to be in after those consequences have occurred? And after there is some level of accountability held, what side of the house would they like to be in?

 I am hopeful that with increased awareness, there is some accountability, but in my opinion, That accountability is highly unlikely to come from actors at the top, that profit the most from the status quo. I think that accountability is far more likely to come through the bottom, through, uh, employees sort of holding their leaders accountable through public sector entities, through state’s attorneys generals, holding entities they work with accountable through regulators, so on and so forth.

ERIK EDSTROM 

I would also disagree in part with the framework that we should put the onus on business, to make the changes that we need in the world. They’re not going to, And if you think about businesses as a bell curve of adoption, where there are. The frontier, you know, 5% of the companies, let’s just say, you know, the Patagonias of the world, they are actively making it a part of their business model. It’s also a type of good that is very visual and that people want to present to the world, as I’m going to signal to you that this is what I care about, therefore I buy this. Now, does that same person think about the insulation that’s in their home, you know, all of the other humdrum goods that you’re buying are those looked at with the same level of scrutiny and the answer’s not.

And therefore, those businesses and those industries are not incentivized to change as quickly as those that, um, are more susceptible, to not being purchased because of the way that things are made. So in in the bell curve of adoption, you will get the front runners who will change on their own. There will be others that will, you know, receive pressure because employees won’t wanna work for them because they care about these issues.

But that still probably isn’t the majority, at least not now. And so if you’re trying to rely on that framework to get the change that we need in the world, it’s going to fail. So, I mean, my perspective is that, this is not a referendum on capitalism and that, McKinsey shouldn’t be held up as it is, good or bad.

Because whether or not we like Milton Friedman or not, it is that capitalism today does. accept and acknowledge negative externalities and those need to be priced in in order to achieve wholesale change. So that is the carbon tax. you know, businesses that. operate, by emitting a lot of carbon and don’t want to spend the CapEx to completely overhaul their business, uh, are not incentivized to push that.

And that’s exactly what Rizwan was talking about. If you get in the room with someone who is not incentivized to make that change, you’ll be very difficult to change them from the outside as a third-party advisor. And so, I mean, the onus, I believe, is on government to change the policies if. If McKinsey was as fearful of getting sued by Mora Healy and the Massachusetts State Attorney General, as they, as they were from, uh, the opioid crisis and paying over $600 million for turbocharging opioid sales, if that same, risk, uh, applied for climate change they would change very quickly. So in a long answer, the market does what the rules of the game allow them to do. so if you change the rules of the game, the companies that are playing in the game will also change their behaviors. 

TY MONTAGUE

There are so many things I would love to ask you and continue this conversation and it’s been a, a fantastic conversation. But I have to wrap up with one last question for both of you. McKinsey says that its purpose is to help create positive enduring change in the world.

And we have a tool on this show called the BS Index. It goes from zero to a hundred, right? Zero being the best, zero BS 100 being the worst total bs. What score would each of you give? McKenzie? Eric, I’m gonna ask you to go first.

ERIK EDSTROM 

Well, I mean, McKenzie loves a good 80 20, so I’d give them an 80 on this one. and the reason I would provide a score of 80 is the asymmetry of the damage. it is, again, not denying that there is a tremendous amount of positive good that they have done and continue to do. But on these, this particular topic where they’ve been serving the fossil fuel industry for reported 70 years, the magnitude of that damage far outweighs and outpaces the benefits that are provided to your local health insurance company or another financial institution. So to say that that is long-term positive, um, is, is hard to believe.

 TY MONTAGUE 

Fair enough. Thank you for that, Eric Rizwan.

RIZWAN NAVEED 

Well, if you read my email, you probably know the math. It’s pretty similar to Eric’s with regards to emissions. It’s quite simple math. The 600, sustainability projects that Bob coded in his Wall Street Journal article, If you put those on one side and the emissions, they abated. And if you put the emissions that we have served, even on the same time horizon, if we were to be charitable and.

Put the outlook forward looking for those entities and continue to serve them, and however many projects McKinsey holds in sustainability. I would suspect any reasonable approach, any reasonable, even the most charitable one, would show you the same outcome. Probably significantly worse 

TY MONTAGUE 

So what score does that lead to in your mind?

RIZWAN NAVEED 

I would love for the firm to do that accounting and tell the world what the score is and be honest about it year to year, I’m unfortunately unable to say, because I know exactly what that score is.

TY MONTAGUE 

But I mean, I’m asking you for a BS score for McKinsey, like how big a bullshitter is McKinsey, when they say that they’re out to create positive enduring change in the world?

RIZWAN NAVEED 

With all due respect to my colleagues, particularly in the sustainability practice, who would like to see that, I would suspect that many of them in private would agree that it’s 80% bullshit 

TY MONTAGUE

I’m very inspired by both of you and I very much appreciate your coming on the show today. So thank you both for being here.

ERIK EDSTROM 

Thank you, Ty.

RIZWAN NAVEED 

Thank you, Ty.

TY MONTAGUE (VO) 

I’d like to end the show by giving Mckinsey an official Bullshit Score. Mckinsey is saying they are purpose-led, and clearly are not. That’s bad. They also claim to be in the business of helping other companies become purpose-led. That’s even worse. Because they are getting purpose so wrong, and because, if they decided to get it right they could do so much good, I’m giving Mckinsey a 98. That’s the highest score we’ve given to date. 

To weigh in with your own score visit our website, callingbullshitpod.com. We’ll track Mckinsey’s behavior over time to see if they decide to try to bring that score down. You’ll also be able to see where McKinsey ranks on BS compared to the other companies and organizations we’ve featured on this show.

And to the Global Managing Partner, Bob Sternfels – if you heard anything in this episode that you’d like to discuss further – you have an open invitation. 

TY MONTAGUE (VO) 

If you’re starting a purpose-led business, or you are thinking of beginning the journey of transformation to become one, here are three things that you can take away from this episode: 

1) Purpose matters. It’s not marketing, it’s not fluff. It is not a cynical way to trick young people into joining your business. Purpose is a key ingredient in driving a transition to a new and more sustainable global economy. It hurts my heart that a company like Mckinsey is using the term so cynically. Don’t emulate them. 

2) A principle isn’t a principle until it costs you money. And being purpose-led means you don’t take money if it doesn’t align with your purpose. Mckinsey hasn’t gotten that memo. Have you? 

3) Yeah, worth repeating: Don’t talk it unless you’re willing to walk it. This is literally why we started this show. Saying it is so much easier than doing it. But saying and not doing it are toxic to your business and to the world. Don’t do it.

TY MONTAGUE (VO)  

If this episode made you want to consult more with this podcast subscribe to the Calling Bullshit podcast on the iHeart Radio app, Apple Podcasts, or wherever you listen to people speak into your ears. 

And friends, I’d like to ask for your help. If you enjoy the calling Bullshit podcast please take a second to rate us on Apple podcasts or your preferred platform. It helps more people find the show.  

Thanks to our guests, NY Times journalist and co-author of the new book, When McKinsey Comes to Town Mike Forsythe. And former McKensy consultants Rizwan Naveed, and Erik Edstrom. Learn more about them and get links to their work in our show notes or our website: callingbullshitpodcast.com. 

Thanks to our production team. Hannah Beal, Amanda Ginsburg, DS Moss, Haley Paskalides, and Parker Silzer. 

Calling Bullshit was created by Co Collective and it’s hosted by me, Ty Montague. Thanks for listening.

 

 

Don’t agree with our Bullshit Score?
Give us your take.

Tagged as: , , .

Rate it
Post comments (0)

Leave a reply

Your email address will not be published. Required fields are marked *

Previous episode