McKinsey to pay $573M to settle claims over opioid crisis role: source(reuters.com)
reuters.com
McKinsey to pay $573M to settle claims over opioid crisis role: source
https://www.reuters.com/article/us-usa-mckinsey-idUSKBN2A405Q
560 comments
This is a significant hit for a private company. If McK has 2,000 partners, that’s almost $300k per partner. (Yes - they are very well compensated, and this is probably just a fraction of their pension plan)
Well, considering the damage they caused this is nothing. They advised on /got and got paid for how to "turbocharge" opioid sales and that tuned out to be an illegal and immoral thing.
I'd be keen to see the specifics wrt advice given on how to "turbocharge" said sales. Reuters article doesn't give any examples/detail.
Articles like https://www.nytimes.com/2020/11/27/business/mckinsey-purdue-... have some details.
A quote from that shows some details :-
" In a 2017 presentation, according to the records, which were filed in court on behalf of multiple state attorneys general, McKinsey laid out several options to shore up sales. One was to give Purdue’s distributors a rebate for every OxyContin overdose attributable to pills they sold.
The presentation estimated how many customers of companies including CVS and Anthem might overdose. It projected that in 2019, for example, 2,484 CVS customers would either have an overdose or develop an opioid use disorder. A rebate of $14,810 per “event” meant that Purdue would pay CVS $36.8 million that year. "
A quote from that shows some details :-
" In a 2017 presentation, according to the records, which were filed in court on behalf of multiple state attorneys general, McKinsey laid out several options to shore up sales. One was to give Purdue’s distributors a rebate for every OxyContin overdose attributable to pills they sold.
The presentation estimated how many customers of companies including CVS and Anthem might overdose. It projected that in 2019, for example, 2,484 CVS customers would either have an overdose or develop an opioid use disorder. A rebate of $14,810 per “event” meant that Purdue would pay CVS $36.8 million that year. "
Many thanks; an informative read. FWIW I've just come across a related piece in Jacobin from December 2020:
https://jacobinmag.com/2020/12/mckinsey-consulting-firm-opio...
https://jacobinmag.com/2020/12/mckinsey-consulting-firm-opio...
I mean that logic is just sick and heartless.
So, they recommended paying distributors to kill people.
Because, in addition to the profit distributors would make by merely being in business, they would make even more money for each related death.
Because, in addition to the profit distributors would make by merely being in business, they would make even more money for each related death.
an article I saw said they targeted outreach at doctors who were more likely to write Rxs
edit: beaten w/ the article
edit: beaten w/ the article
Many details have been published in the media. For instance:
"Documents filed in U.S. courts last year outlined how McKinsey discussed ways for Purdue to “turbocharge” sales of its drug OxyContin, including paying Purdue’s distributors a rebate for every OxyContin overdose attributable to pills they sold."
source: https://www.theglobeandmail.com/politics/article-mckinsey-is...
source: https://www.theglobeandmail.com/politics/article-mckinsey-is...
It's peanuts. This likely will be covered by some form of insurance, and very little will change.
Too bad they can't be sued for ruining countless businesses with mindless self-serving "advice" meant to do nothing more than get their contracts re-upped.
The whole business is a scam built around sending in some 26 year-old with an Ivy League degree and $100 haircut to regurgitate snippets from articles in HBR.
The whole business is a scam built around sending in some 26 year-old with an Ivy League degree and $100 haircut to regurgitate snippets from articles in HBR.
I'm a 20 something McK consultant with a $10 haircut. Maybe $20 with tip. Or $0 now, because it's done at home.
I post this fairly frequently, but here we go again. Business is hard. Change is hard. Consultants get a lot of shit for saying things that someone lower in the org could have told them. That's not evidence of abuse, that's evidence that your org isn't working well. A lot of the time substantial portions of the findings come from interviewing and listening to lower ranking experts in the client. Bringing in consultants is, among other ways, a way to bring in people who can get shit done, moving bricks at lower levels of the org with the political mandate of the top. That's quite valuable, because otherwise a lot of orgs are just entrenched. A very large number of senior leaders don't know how to accomplish X, and don't know how to get the information about X from their own company. And again, that's not an insult, because business is hard. It's great and all for you to say "regurgitate snippets from articles in HBR" but I can't say that resembles any work I've done, ever.
Opioid work was bad though, let's not avoid that. (edit for spelling)
I post this fairly frequently, but here we go again. Business is hard. Change is hard. Consultants get a lot of shit for saying things that someone lower in the org could have told them. That's not evidence of abuse, that's evidence that your org isn't working well. A lot of the time substantial portions of the findings come from interviewing and listening to lower ranking experts in the client. Bringing in consultants is, among other ways, a way to bring in people who can get shit done, moving bricks at lower levels of the org with the political mandate of the top. That's quite valuable, because otherwise a lot of orgs are just entrenched. A very large number of senior leaders don't know how to accomplish X, and don't know how to get the information about X from their own company. And again, that's not an insult, because business is hard. It's great and all for you to say "regurgitate snippets from articles in HBR" but I can't say that resembles any work I've done, ever.
Opioid work was bad though, let's not avoid that. (edit for spelling)
”Bringing in consultants is, among other ways, a way to bring in people who can get shit done, moving bricks at lower levels of the org with the political mandate of the top”
It seems more likely that it’s a politically expedient way to get cover for a decision (in other words CYA insurance). If the plan fails, blame the consultants. If it works, take credit for having brought them in. It also puts more pressure on exec to make a decision (we just spent $10M on this strategy plan, are we really going to it on it?). It’s genius, if it didn’t highlight the utter dysfunction of a firm.
McKinsey scandals also aren’t confined to Opiod work. It’s also been involved with Enron, corruption in Africa, peddling of mortgage backed securities during ‘07-‘08 crisis and I’m sure many more that they’ve done a great job at hiding from the public.
It seems more likely that it’s a politically expedient way to get cover for a decision (in other words CYA insurance). If the plan fails, blame the consultants. If it works, take credit for having brought them in. It also puts more pressure on exec to make a decision (we just spent $10M on this strategy plan, are we really going to it on it?). It’s genius, if it didn’t highlight the utter dysfunction of a firm.
McKinsey scandals also aren’t confined to Opiod work. It’s also been involved with Enron, corruption in Africa, peddling of mortgage backed securities during ‘07-‘08 crisis and I’m sure many more that they’ve done a great job at hiding from the public.
Yup, freelance software dev here, and I've been that consultant before for a large healthcare company. They had a new VP and he wanted to make changes to the app and org but needed a report from an external consultant to CYA. He already knew what he wanted the report to say and was not subtle on it. I talked to a couple people in the org, wrote a quick report basically signing off on his plan, and got paid handsomely. Thankfully, what he wanted to do was IMO correct, but the whole thing was ridiculous. They tried to bring me back to lead the dev team but I wasn't super interested in dealing with those politics.
I don't think it's ridiculous, it's how things work in many companies. People use various methods and tricks trying to convince others or get what they want from them. Sometimes the CEO is hesitant and needs a push from the consultancy,sometimes it's power games and etc. Most businesses have these things, it's not unique,even though some people would like to believe it.
Exactly. I called this “decision insurance” elsewhere in this comments section.
So, does this conflict with the "Bad businesses with bad models are more likely to want help changing" narrative? There's a world in which this squares with McKinsey coming in to help those businesses with the change being pushed on them.
Such business should, you know, bring in leaders who can improve their business. Or train their leaders via executive MBA programs (there are so many). McK touts as being able to transform businesses but all they will do is add more costs and send in clueless consultants who your employees will somehow have to try and get along with.
The correct term is plausible deniability or indirection of accountability. It's an advanced political maneuver.
I hear this one pretty often. I'm sure it happens to some extent. But flip the perspective there. You're talking about a a company that is so dysfunctional its leaders can't make decisions on their own. Getting stuff done there sounds pretty difficult to begin with. If stuff gets done, that's valuable. That's part of what I'm saying. Business is hard.
They parrot back exactly what the business wants to do. I’ve seen it in action. Rarely do they ever say anything that’s truly business changing.
And yet, the business can't actually do those things without them for some reason (well often can't do it with consultants either). Large groups of people have weird dynamics.
"Business changing" in this context would seem to mean "actually getting anything done at all", ie pushing back against the bureaucracy. See also "meets expectations" -> firing line, "exceeds expectations" -> kept on.
Some of the main "controversies" re McKinsey are outlined in its Wikipedia entry:
https://en.wikipedia.org/wiki/McKinsey_%26_Company#Controver...
In the interest of balance, here is what McKinsey has to say about social responsibility in its "about us" section of its corporate website: Our purpose as a firm is to help create positive, enduring change in the world.
https://www.mckinsey.com/about-us/social-responsibility
https://en.wikipedia.org/wiki/McKinsey_%26_Company#Controver...
In the interest of balance, here is what McKinsey has to say about social responsibility in its "about us" section of its corporate website: Our purpose as a firm is to help create positive, enduring change in the world.
https://www.mckinsey.com/about-us/social-responsibility
Taking a step back, McKinsey can exist in it's current form, as a nurse for these elderly giants, because of the lack of anti-trust.
If we had real competition, there would be more money to be made knocking the giants down than trying to keep them in their walker.
If we had real competition, there would be more money to be made knocking the giants down than trying to keep them in their walker.
Uhh, I'm not sure what to think of this, but I initially took "walker" to mean "baby walker". The comparison seemed fair for a second, considering old myths about giants and lowered intelligence. Then the "elderly" part properly carried across and I realized, oh.
But still. Hmm.
But still. Hmm.
> It seems more likely that it’s a politically expedient way to get cover for a decision (in other words CYA insurance).
This guy consults
This guy consults
> It’s also been involved with Enron, corruption in Africa
This is not past tense.
In South Africa there is a commission (a political farce if anyone cares) to investigate state capture and McKinsey[0] keeps showing up on records and testimonies.
[0](https://www.google.com/amp/s/www.nytimes.com/2018/06/26/worl...)
This is not past tense.
In South Africa there is a commission (a political farce if anyone cares) to investigate state capture and McKinsey[0] keeps showing up on records and testimonies.
[0](https://www.google.com/amp/s/www.nytimes.com/2018/06/26/worl...)
It seems more likely that it’s a politically expedient way to get cover for a decision
That's certainly one of the reasons you would bring in consultants.
I think critics of consultants are, in general, too quick to dismiss the monetary value of political lubrication. If it's going to get your management hierarchy to admit there's a problem at all, or if it's going to get your management hierarchy out of a deadlock, that's worth something. If your organization is able to actually focus on the problems despite the politics, you are probably not a a typical McKinsey/Bain/BCG/etc. customer.
With maybe one exception, none of the consultants I know ever fit the mold of a fresh-out-of-college generalist who thinks their frameworks and raw intellect will help them come up with better answers than a specialist could. They mostly all understood that their jobs were to escort boring, good enough ideas through the boardroom politics. And that was often something they were good at, and they were often acutely aware that some people in those companies already had the answers but the organization was too dysfunctional to recognize the fact.
That's the core of the problem anyway. But naturally they'll sell you a lot of other promises and products, and those are where I think management consultants are the wrong answer. Just hire real specialists.
The other problem I have with management consultants is that I feel they, both the companies and many of the individuals, are too amoral to be healthy for society, but that's not about their competence.
That's certainly one of the reasons you would bring in consultants.
I think critics of consultants are, in general, too quick to dismiss the monetary value of political lubrication. If it's going to get your management hierarchy to admit there's a problem at all, or if it's going to get your management hierarchy out of a deadlock, that's worth something. If your organization is able to actually focus on the problems despite the politics, you are probably not a a typical McKinsey/Bain/BCG/etc. customer.
With maybe one exception, none of the consultants I know ever fit the mold of a fresh-out-of-college generalist who thinks their frameworks and raw intellect will help them come up with better answers than a specialist could. They mostly all understood that their jobs were to escort boring, good enough ideas through the boardroom politics. And that was often something they were good at, and they were often acutely aware that some people in those companies already had the answers but the organization was too dysfunctional to recognize the fact.
That's the core of the problem anyway. But naturally they'll sell you a lot of other promises and products, and those are where I think management consultants are the wrong answer. Just hire real specialists.
The other problem I have with management consultants is that I feel they, both the companies and many of the individuals, are too amoral to be healthy for society, but that's not about their competence.
McKinsey is particularly known for obfuscating experience level and favoring a funnel of new ivy or ivy-like grad (often at graduate level, mind) through an internal bootcamp approach and out into the world as "expert".
I think that's what the GP was poking at.
You aren't wildly wrong on the job as a whole, though reasonably often it's more to escort boring bad ideas through the politics for someones benefit. And on the "amoral" front, they know what side their bread is buttered on.
I think that's what the GP was poking at.
You aren't wildly wrong on the job as a whole, though reasonably often it's more to escort boring bad ideas through the politics for someones benefit. And on the "amoral" front, they know what side their bread is buttered on.
> It seems more likely that it’s a politically expedient way to get cover for a decision
I have not doubt that is true in some cases. However, it might be a a bit too cynical to see it that way in all cases.
I have a developer on my team that is the most senior guy on the team. He is a grey beard on a team full of junior developers fresh out of startup code bootcamp. Sometimes he is thinking about big technical challenges and he just wants someone to talk to that can give him some feedback.
One of the things I miss about working in open offices is being able to turn around and fire ideas off of a colleague. Even if I know I am right, even if I have the ability to unilaterally make a decision, often times I just want a second opinion. I've even heard people here suggesting a paid service so you could get a short amount of principal engineer time to bounce ideas off of.
I mean, isn't that more or less what McKinsey is, except for business people? When I think of it that way ... it doesn't feel as cynical anymore. If I'm a CEO (or any level of exec) and I don't have peers that can provide me valuable second opinions and I have the budget - why not pay someone for that second opinion?
I have not doubt that is true in some cases. However, it might be a a bit too cynical to see it that way in all cases.
I have a developer on my team that is the most senior guy on the team. He is a grey beard on a team full of junior developers fresh out of startup code bootcamp. Sometimes he is thinking about big technical challenges and he just wants someone to talk to that can give him some feedback.
One of the things I miss about working in open offices is being able to turn around and fire ideas off of a colleague. Even if I know I am right, even if I have the ability to unilaterally make a decision, often times I just want a second opinion. I've even heard people here suggesting a paid service so you could get a short amount of principal engineer time to bounce ideas off of.
I mean, isn't that more or less what McKinsey is, except for business people? When I think of it that way ... it doesn't feel as cynical anymore. If I'm a CEO (or any level of exec) and I don't have peers that can provide me valuable second opinions and I have the budget - why not pay someone for that second opinion?
I was a consultant for ten years, not at McKinsey, but a very small firm that actually was ethical by comparison at least, and actually got some good things done, and then later, at another small company that was completely unethical.
In many cases, there was not any question that your job was to justify a decision that had already been made, or attack another group within the company on behalf of whoever was writing you a check. I was literally told on a number of occasions that regardless of what the SOW said, our job was to make whoever was writing the check look good.
In many cases, there was not any question that your job was to justify a decision that had already been made, or attack another group within the company on behalf of whoever was writing you a check. I was literally told on a number of occasions that regardless of what the SOW said, our job was to make whoever was writing the check look good.
The problem with this is we don't (and one presumes you don't either) know whether you're above or below average. My perspective, from running into people from Big Computer consultancies back in the '00s was that the business model was to hire recent college grads, pump them up with the sheen of the company brand and then let them learn on the job at smaller companies and "failing upward" until they are experienced enough to be loaned out at massive rates based on their long track record of . . . success. Whether any customer during that process benefited from the consultant's journey is mere coincidence.
Honestly my impression is that management consultants don’t need to be above average to add value, they (or more accurately, the people who implement their recommendations) just need to be empowered to actually do stuff. The recruiting from top schools is primarily because the people hiring them want to think their problems are hard and unique (that’s why they need consultants!) and therefore necessitate the best and brightest.
I'm not sure what a big computer consultancy is. Is that like IBM? Accenture? I don't think where I fall in the ranks matters much here.
Loaned out doesn't feel applicable here though. There are some consultancies that are primarily just staff augmentation. Like, here are some expensive workers for you to use for a while. That's not really what McK does. McK is doubtlessly very expensive. "pumping people up on the job" sounds like a bad faith way to describe training and investing in your employees.
I don't have a way to "prove" that the average net impact of McK consulting is positive, and for sure sometimes it won't be right. My only point is that most if not all of the clients I work with are blunt about not knowing how to do X on their own, and when we're done with the project they say they know how to do X. We do fixed price contracts, not per hour, and are incentivized to keep the scope fixed. Our prices are generally higher than competitors, but we still win bids. I don't need to believe McK is the greatest company in the world, but I strongly disagree that we're not making a good faith effort to help clients do things.
Loaned out doesn't feel applicable here though. There are some consultancies that are primarily just staff augmentation. Like, here are some expensive workers for you to use for a while. That's not really what McK does. McK is doubtlessly very expensive. "pumping people up on the job" sounds like a bad faith way to describe training and investing in your employees.
I don't have a way to "prove" that the average net impact of McK consulting is positive, and for sure sometimes it won't be right. My only point is that most if not all of the clients I work with are blunt about not knowing how to do X on their own, and when we're done with the project they say they know how to do X. We do fixed price contracts, not per hour, and are incentivized to keep the scope fixed. Our prices are generally higher than competitors, but we still win bids. I don't need to believe McK is the greatest company in the world, but I strongly disagree that we're not making a good faith effort to help clients do things.
Can you give me a couple of examples where McKinsey’s work was helpful to a society ? Jobs were saved, lives were saved , poverty was eradicated ?
Everywhere I look it’s just strategies to increase sales ,lay-off lower level employees and boost executive and shareholder profit .
Everywhere I look it’s just strategies to increase sales ,lay-off lower level employees and boost executive and shareholder profit .
Probably not to a degree that would be satisfying to me as a random external stranger. Most work is very secret, to avoid conflicts of interest. I don't know what others work on. I know of a few high profile things lately that have had positive impact on the world, but it's all NDA'd as well.
https://www.mckinsey.com/business-functions/mckinsey-analyti...
I guess this group is a decent example of our public things, doing data science stuff to help human trafficking victims and what not. I don't have any experience with this group in particular and cannot speak to it. For my personal work space all I can say is that ~90% of my work felt morally neutral, and 10% felt morally positive.
One project was for a similar neutral task in an industry I think is detrimental to society so I declined to do it. That's also a thing which is encouraged and I think is nice. YMMV
https://www.mckinsey.com/business-functions/mckinsey-analyti...
I guess this group is a decent example of our public things, doing data science stuff to help human trafficking victims and what not. I don't have any experience with this group in particular and cannot speak to it. For my personal work space all I can say is that ~90% of my work felt morally neutral, and 10% felt morally positive.
One project was for a similar neutral task in an industry I think is detrimental to society so I declined to do it. That's also a thing which is encouraged and I think is nice. YMMV
I have to say it doesn't strengthen your case to say "the damaging ones are public, the good ones are private."
That's asking for a lot of trust in an organization with a public history of doing damage to societies, like with the opioid thing or the Canadian bread price fixing agreement.
That's asking for a lot of trust in an organization with a public history of doing damage to societies, like with the opioid thing or the Canadian bread price fixing agreement.
The price is higher because the logo on the report is better insurance than another logo. In particular, the logo is better because of “The McKinsey Way”. McKinsey figured out how to repeatably and reliably manufacture strategic decision support.
Much like McDonalds means every burger everywhere no matter who owns and runs that franchise is predictably decent, the principles of The McKinsey Way and frameworks like 7S and MECE mean every wet-behind-the-ears graduate is going to produce work of sufficient logic, data, and quality to plausibly support the position McK was hired to support.
Much like McDonalds means every burger everywhere no matter who owns and runs that franchise is predictably decent, the principles of The McKinsey Way and frameworks like 7S and MECE mean every wet-behind-the-ears graduate is going to produce work of sufficient logic, data, and quality to plausibly support the position McK was hired to support.
Yes, IBM, Oracle, Accenture
>"pumping people up on the job" sounds like a bad faith way to describe training and investing in your employees.
That's just it: the customers are investing in your employees by letting them learn on their job but never reap the benefit of the experience. It's not a long-term recipe for success.
>"pumping people up on the job" sounds like a bad faith way to describe training and investing in your employees.
That's just it: the customers are investing in your employees by letting them learn on their job but never reap the benefit of the experience. It's not a long-term recipe for success.
That said, an ex-McKinsey consultant often ends up getting selected by one of those companies as its CEO.
There’s tremendous value in the repeated problem exposures the consultant received, combined with the rigorous framework thinking.
There’s tremendous value in the repeated problem exposures the consultant received, combined with the rigorous framework thinking.
In other words your clients have incompetent executives and instead of suggesting those people be replaced you do their work for them since they are the ones paying your fees.
It's easy to be critical of executives. A naive narrative could sound like this: "Bob was hired to turn the company around, and 3 months later the company is still bleeding money. Bob sucks." But it's important to understand the two difficult tasks that Bob is facing:
1) Identify all mistakes made by the previous management and come up with a plan to correct them.
2) Get buy-in for your plan and execute it.
It might appear that 1) is harder than 2). But it turns out that the company's interests are not always aligned with each and every individual in the company, and implementing change always results in winners and losers. Getting the buy in from losers can understandably be quite hard. And then you also have the winners who sympathize with the losers and don't realize that they will also lose their jobs if the plan is not implemented.
When you're running a startup, a CEO can single-handedly turn things around. In a larger corporation, a CEO is going to rely on a chain of command to get things done. When you factor in the misaligned incentives or loyalty for people who are at risk of losing their jobs, it's easy to see how information channels can stop working and neither 1) nor 2) can be accomplished successfully.
I agree that brining in a 3rd party like McKinsey feels like a lazy shortcut to addressing the fundamental organizational challenges, but the more I see, the more I am starting to understand the upside of that option.
1) Identify all mistakes made by the previous management and come up with a plan to correct them.
2) Get buy-in for your plan and execute it.
It might appear that 1) is harder than 2). But it turns out that the company's interests are not always aligned with each and every individual in the company, and implementing change always results in winners and losers. Getting the buy in from losers can understandably be quite hard. And then you also have the winners who sympathize with the losers and don't realize that they will also lose their jobs if the plan is not implemented.
When you're running a startup, a CEO can single-handedly turn things around. In a larger corporation, a CEO is going to rely on a chain of command to get things done. When you factor in the misaligned incentives or loyalty for people who are at risk of losing their jobs, it's easy to see how information channels can stop working and neither 1) nor 2) can be accomplished successfully.
I agree that brining in a 3rd party like McKinsey feels like a lazy shortcut to addressing the fundamental organizational challenges, but the more I see, the more I am starting to understand the upside of that option.
It is one thing to bring in some more workers to help you with research you don't have the ability to do. It is another thing to pay someone to make a report backing up a decision you have already made. It is another thing to pay someone to make a decision that you don't want to make, so they can take the blame. The first example is not why management consulting gets a bad name.
This is helpful for understanding why management consulting gets a bad name, and I am not pushing back on that. The parent comment I responded to was making the claim that executives who hire such consultants are incompetent, and I think we both agree that this is not about their competency.
> clients have incompetent executives
Nope. I don't agree with this at all. I'm saying, 100% clarity, that business is really hard. Working with a large organization is really hard. Many cultures are very rigid.
People are quick to comment about the intricacies of team dynamics, but hand wave the larger org stuff. There's a tough doublethink whereby I might say its not that hard to play the role of an upper level executive, because you can mostly just ride the tide and be fine, but effectively identifying a problem, a solution, and implementing it in a large org? Extremely tough.
Nope. I don't agree with this at all. I'm saying, 100% clarity, that business is really hard. Working with a large organization is really hard. Many cultures are very rigid.
People are quick to comment about the intricacies of team dynamics, but hand wave the larger org stuff. There's a tough doublethink whereby I might say its not that hard to play the role of an upper level executive, because you can mostly just ride the tide and be fine, but effectively identifying a problem, a solution, and implementing it in a large org? Extremely tough.
Whose fault are all these “hard” negatives you keep citing? Why are they not universal?
Try “five whys” and see where you end up.
Try “five whys” and see where you end up.
How are you going to suggest to the people paying you to replace them?
At the end of the day, someone is your boss and pays you, and you are gonna do what they want
At the end of the day, someone is your boss and pays you, and you are gonna do what they want
You at your years-of-experience most likely don’t yet find it painful to learn.
The folks with one to three decades more time at bat who are hiring you most likely do find learning and change literally painful. Not because of age, but because of “number of trials” at the change experiment, where often someone gets burned.
Reading, learning, thinking differently, hurts the ego, as it makes clear you were less informed before, and puts you on unknown ground where you don’t know if you’re failing or not. This is hard for a lot of people, ironically especially hard for folks who started out as high performers in spaces with “known knowns” knowledge available (aka, school and textbooks, where learning isn’t an ego problem, it’s expected that you didn’t know).
You haven’t yet developed the instinct to yank your hand off the stove, and you don’t have to stick around long to see if your hand gets burned anyway, so you’re valuable to these folks.
The folks with one to three decades more time at bat who are hiring you most likely do find learning and change literally painful. Not because of age, but because of “number of trials” at the change experiment, where often someone gets burned.
Reading, learning, thinking differently, hurts the ego, as it makes clear you were less informed before, and puts you on unknown ground where you don’t know if you’re failing or not. This is hard for a lot of people, ironically especially hard for folks who started out as high performers in spaces with “known knowns” knowledge available (aka, school and textbooks, where learning isn’t an ego problem, it’s expected that you didn’t know).
You haven’t yet developed the instinct to yank your hand off the stove, and you don’t have to stick around long to see if your hand gets burned anyway, so you’re valuable to these folks.
[deleted]
I found this very insightful, thank you.
Sage wisdom
Maybe it is because I'm still not there yet, but I feel that there is a nugget of wisdom in here that I still can't wrap my head around completely.
Is this pointing to the same idea behind "the chains of habit are too light to be felt until they are too heavy to be broken"? I concede I may not be as quick to learn as I was when I was in my late teens/early 20s, but I hope that I'll still be able to learn new things and able to recognize the error in my judgement well into my old age - despite having been a classically high performer in school (although grad school did pummel me down).
Is this pointing to the same idea behind "the chains of habit are too light to be felt until they are too heavy to be broken"? I concede I may not be as quick to learn as I was when I was in my late teens/early 20s, but I hope that I'll still be able to learn new things and able to recognize the error in my judgement well into my old age - despite having been a classically high performer in school (although grad school did pummel me down).
Let’s just post these articles here.
> They proposed cuts in spending on food for migrants, as well as on medical care and supervision of detainees, according to interviews with people who worked on the project for both ICE and McKinsey and 1,500 pages of documents obtained from the agency after ProPublica filed a lawsuit under the Freedom of Information Act.[1]
[1]https://www.nytimes.com/2019/12/03/us/mckinsey-ICE-immigrati...
The CEO of Enron was a former McKinsey consultant and helped them transition from an Oil and Gas company. Arthur Anderson was just the firm left holding the bag at the end. [2]
[2] https://en.m.wikipedia.org/wiki/Jeffrey_Skilling
McKinsey helping dictators. [3]
[3] https://www.nytimes.com/2018/12/15/world/asia/mckinsey-china...
> On October 20th, the Times reported that the government of the Saudi crown prince, Mohammed bin Salman, had employed operatives to harass dissidents, including the Saudi journalist Jamal Khashoggi, who was allegedly murdered inside the Saudi consulate in Istanbul, on October 2nd. The article included the revelation that McKinsey had prepared a nine-page report measuring the public perception of certain Saudi economic policies, and cited three individuals who were driving much of the largely negative coverage on Twitter: a Saudi Arabia-based writer named Khalid al-Alkami, a dissident living in Canada named Omar Abdulaziz, and an anonymous writer. After the report was created, Al-Alkami was arrested, and Abdulaziz’s brothers living in Saudi Arabia were put in prison. The anonymous Twitter channel was shut down.[4]
[4] https://www.newyorker.com/news/news-desk/mckinseys-work-for-...
> They proposed cuts in spending on food for migrants, as well as on medical care and supervision of detainees, according to interviews with people who worked on the project for both ICE and McKinsey and 1,500 pages of documents obtained from the agency after ProPublica filed a lawsuit under the Freedom of Information Act.[1]
[1]https://www.nytimes.com/2019/12/03/us/mckinsey-ICE-immigrati...
The CEO of Enron was a former McKinsey consultant and helped them transition from an Oil and Gas company. Arthur Anderson was just the firm left holding the bag at the end. [2]
[2] https://en.m.wikipedia.org/wiki/Jeffrey_Skilling
McKinsey helping dictators. [3]
[3] https://www.nytimes.com/2018/12/15/world/asia/mckinsey-china...
> On October 20th, the Times reported that the government of the Saudi crown prince, Mohammed bin Salman, had employed operatives to harass dissidents, including the Saudi journalist Jamal Khashoggi, who was allegedly murdered inside the Saudi consulate in Istanbul, on October 2nd. The article included the revelation that McKinsey had prepared a nine-page report measuring the public perception of certain Saudi economic policies, and cited three individuals who were driving much of the largely negative coverage on Twitter: a Saudi Arabia-based writer named Khalid al-Alkami, a dissident living in Canada named Omar Abdulaziz, and an anonymous writer. After the report was created, Al-Alkami was arrested, and Abdulaziz’s brothers living in Saudi Arabia were put in prison. The anonymous Twitter channel was shut down.[4]
[4] https://www.newyorker.com/news/news-desk/mckinseys-work-for-...
ICE was very bad. A lot of internal strife and change over those (and opiods).
Enron and china I'm not really familiar with. The Saudi one is, in my opinion, not a an accurate portrayal. My understanding is McKinsey did not create a report for the Saudi gov't on it and that it was someone who chose a deeply unfortunate example to demo some social network analysis stuff, internally, and not intended to be shared.
Enron and china I'm not really familiar with. The Saudi one is, in my opinion, not a an accurate portrayal. My understanding is McKinsey did not create a report for the Saudi gov't on it and that it was someone who chose a deeply unfortunate example to demo some social network analysis stuff, internally, and not intended to be shared.
cryoshon(1)
> Opiod work was bad though, let's not avoid that.
Sorry that’s all you have to say about your employer quite literally supercharging the opioids pandemic causing unimaginable pain and destruction across America? “It was bad though.”
Let me tell you some hard truths. If you’re 20 something you don’t know Jack shit about running a business and the only reason you’re there is because the C Suite wants to “de-risk” their decision making, or the board member heard about McK during golfing with his buddies.
If Senior Leaders can’t do X, they should, you know, get training. Go to online schools, get executive MBA training. Why don’t they do that? Because that’s not really the real reason you’re there.
McK and other consultancies have been a cancer on corporate America, creating chaos in the name of “digital transformation” or whatever buzzword is new. They capitalize on most companies’ fear of being left behind and get inserted into corporations where they make the jobs of regular employees (you know, the people who you went to school with but decided not to go to McK but get a real job and who are familiar with the same types of things that you are) incredibly difficult with inane processes from “the manual”.
Sorry that’s all you have to say about your employer quite literally supercharging the opioids pandemic causing unimaginable pain and destruction across America? “It was bad though.”
Let me tell you some hard truths. If you’re 20 something you don’t know Jack shit about running a business and the only reason you’re there is because the C Suite wants to “de-risk” their decision making, or the board member heard about McK during golfing with his buddies.
If Senior Leaders can’t do X, they should, you know, get training. Go to online schools, get executive MBA training. Why don’t they do that? Because that’s not really the real reason you’re there.
McK and other consultancies have been a cancer on corporate America, creating chaos in the name of “digital transformation” or whatever buzzword is new. They capitalize on most companies’ fear of being left behind and get inserted into corporations where they make the jobs of regular employees (you know, the people who you went to school with but decided not to go to McK but get a real job and who are familiar with the same types of things that you are) incredibly difficult with inane processes from “the manual”.
The point is that you can't say that McKinsey are incompetent and not worth the money, while at the same time saying they are so competent that they created the opiod epidemic. It makes you look silly.
Doing good economic work for bad people is a (gigantic) ethical flaw, but not a problem with the economic quality of the work and skillset.
Doing good economic work for bad people is a (gigantic) ethical flaw, but not a problem with the economic quality of the work and skillset.
Opioids pretty much sell themselves. You just need permission to sell them more loosely.
Here's a non-contradictory summarisation:
1. McKinseys advice is for the most part useless , often their advice is just politically motivated within the clients offices 2. They have zero morals, they will advice how to optimize the gas chambers (probably not too off the mark, they probably are advising something related to uighurs somewhere, maybe how apple can hide traces of genocide fueled chips from their product lineup) if they can make a couple mills. 3. The despots/murderers recruiting them are still going to go ahead with their addiction rings/gas chambers irrespective of what McKinsey tells them. The argument isn't that McKinsey made the opioid problem worse. Maybe they did but they probably will conveniently agree with us that they were not really consequential. Still doesn't mean everyone from McKinsey shouldn't be considered a dick though.
1. McKinseys advice is for the most part useless , often their advice is just politically motivated within the clients offices 2. They have zero morals, they will advice how to optimize the gas chambers (probably not too off the mark, they probably are advising something related to uighurs somewhere, maybe how apple can hide traces of genocide fueled chips from their product lineup) if they can make a couple mills. 3. The despots/murderers recruiting them are still going to go ahead with their addiction rings/gas chambers irrespective of what McKinsey tells them. The argument isn't that McKinsey made the opioid problem worse. Maybe they did but they probably will conveniently agree with us that they were not really consequential. Still doesn't mean everyone from McKinsey shouldn't be considered a dick though.
Are consultants something like lawyers, in that they will do "good" work for ethical clients and "bad" work for unethical ones? Lawyers can point to the higher values of truth and justice. What are the higher values of consultants, to help them avoid "bad" work?
Whatever superlative you want to throw on "bad", go ahead. It was very bad, I just wanted to throw that onto the end of what was otherwise an unrelated point.
There's no expectation that I know how to "run a business". That's not how it works.
There's no expectation that I know how to "run a business". That's not how it works.
I suppose, it could also have been a bunch of 20 somethings pushed to the brink of total exhaustion forced to come up with ways to "mitigate" certain "business risks" and "enhance" positioning.
The "cancer" is not that there is demand and willing buyers for consulting services, but shareholders, executives, media etc. running a very self-referential and reinforcing environment.
Effectively, you will present "solutions" (for a lack of a better word) that you know that the a company knows that you expect the company to expect to see... (institutional isomorphism is a strong force)
> creating chaos in the name of digital transformation
I wonder how many at HN make their living on digital transformation.
I wonder how many at HN make their living on digital transformation.
[deleted]
> Bringing in consultants is, among other ways, a way to bring in people who can get shit done.
I don't think consulting is useless or scammy, but come on, you're not rock stars. Consultants advise a business on how to get revenue, and the business implements changes that generate revenue. This leads to the headline we have before us. There's not much more to consulting. Note: my family are consultants.
I don't think consulting is useless or scammy, but come on, you're not rock stars. Consultants advise a business on how to get revenue, and the business implements changes that generate revenue. This leads to the headline we have before us. There's not much more to consulting. Note: my family are consultants.
You could also say that software devs are just technicians just translate specs into machine language. And product managers are just users who get paid to file feature request. And management just coasts on the real workers' work.
https://www.youtube.com/watch?v=rp6_3UQLi2Y
Steve said it best.
Steve said it best.
No one wants to believe they have a bullshit job. So we usually tell our selves nice little fairy tales to overcome this cognitive dissonance.
Truth is, McK and the like, are there just to give mediocre leaders an extremely expensive psychological crutch needed when human beings face uncertainties.
Now that these consulting agencies are the behemoth they are, it's mainly corrupt leaders that are being "pursuaded" to use their services.
Oh and ppl like you are just cheap "brains" to give the optics of credentials for this sordid affair.
Truth is, McK and the like, are there just to give mediocre leaders an extremely expensive psychological crutch needed when human beings face uncertainties.
Now that these consulting agencies are the behemoth they are, it's mainly corrupt leaders that are being "pursuaded" to use their services.
Oh and ppl like you are just cheap "brains" to give the optics of credentials for this sordid affair.
> Oh and ppl like you are just cheap "brains" to give the optics of credentials for this sordid affair.
100% whataboutism, and I'm not defending the OP or McK, but I wonder what you think of the PhD "brains" hired at Google that end up being in charge of implementing a menu in Google Carplay.
What are they?
100% whataboutism, and I'm not defending the OP or McK, but I wonder what you think of the PhD "brains" hired at Google that end up being in charge of implementing a menu in Google Carplay.
What are they?
At Google many PhDs may end up working on compilers, language runtimes, vulnerability research data center power saving/cooling and so on. And yeah most importantly implementing menu in Google carplay.
So I guess difference is Google has many types of work whereas at McKinsey it is slick MBAs facing fools looking to part with their money.
So I guess difference is Google has many types of work whereas at McKinsey it is slick MBAs facing fools looking to part with their money.
I know of many CS PhDs working at McK doing MBA-facing jobs.
So really, I don't see the difference.
So really, I don't see the difference.
They have bullshit jobs.
I don't get what's the point of your question?
I'm saying the OP has a bullshit job which he fails to acknowledge. I'm also saying is that McK only reason for hiring ppl like OP is virtue signalling and nothing else. And finally that McK is mostly harmful to society.
I never talked about why google hires PhDs. :Shrug:
I don't get what's the point of your question?
I'm saying the OP has a bullshit job which he fails to acknowledge. I'm also saying is that McK only reason for hiring ppl like OP is virtue signalling and nothing else. And finally that McK is mostly harmful to society.
I never talked about why google hires PhDs. :Shrug:
If a consultant is being brought in to do a job you think you should be doing yourself, then who really has the bullshit job in this instance?
First "a consultant" is @ very overloaded term.
I was talking on the type McK bring to do a little business research and give some recommendations.
Software consultants OTH are usually sub-contractors and not consultants per se.
Regarding who has the bullshit job, well, probably both the mediocre/corrupt leaders, and the consultant.
Software consultants OTH are usually sub-contractors and not consultants per se.
Regarding who has the bullshit job, well, probably both the mediocre/corrupt leaders, and the consultant.
Maybe it's bullshit jobs all the way down.
Context : "Bullshit Jobs: A Theory is a 2018 book by anthropologist David Graeber that argues for the existence and societal harm of meaningless jobs. He contends that over half of societal work is pointless, which becomes psychologically destructive when paired with a work ethic that associates work with self-worth. Graeber describes five types of meaningless jobs, in which workers pretend their role is not as pointless or harmful as they know it to be: flunkies, goons, duct tapers, box tickers, and taskmasters."
https://en.wikipedia.org/wiki/Bullshit_Jobs
https://en.wikipedia.org/wiki/David_Graeber
https://en.wikipedia.org/wiki/Bullshit_Jobs
https://en.wikipedia.org/wiki/David_Graeber
I don't think I have a bullshit job. Pay's good. Trajectory is good. People listen to me. Most of it's just fairly arbitrary business decisions. One had a client confirm months later that they believe the work directly contributed to saving lives. If a CEO point blank asks me for my opinion, I think that's more or less the definition of not being another cog in the wheel. The archetypal bullshit job is the finance/accountant who shifts a couple excel cells on a standard template that could have been automated in VBA ages ago. I know this, because that was my first job.
Contrary to popular belief, a good deal of McK work is not just regurgitating a pre-ordained solution. Most of my work involves creating original solutions tbh. But sure, you probably know my job better than me.
Contrary to popular belief, a good deal of McK work is not just regurgitating a pre-ordained solution. Most of my work involves creating original solutions tbh. But sure, you probably know my job better than me.
The reputation of your country is thoroughly ruined in South Africa.
Paying the money back (as was agreed, and even then my understanding is that not all of it will be repaid, no interest was offered and no criminal charges have been proffered) will never cover for the gutting of essential skills in key state owned enterprises under the cover of a McK “restructuring”.
South Africa is in a perfect storm right now and big consultancies and accounting firms all had their fingers in the cookie jar. They all had a part to play. It makes me sick to think what these consultants might achieve in less democratic states as it’s evident their reach is global and they are legion.
In my university days many bright eyed youth wanted to work for these companies. I hope people are waking up!
Edit: For anyone interested “Zondo Comission McKinsey” or “McKinsey South Africa Guptas” should get you quite far.
Edit2: I’ve just given a brief summary. It’s enlightening to dig into the role of Bain, McKinsey and KPMG especially, their relation to Gupta enterprises (common cause) and their enabling of deals, cutting really good people at key state institutions like SARS (Revenue Service), Eskom (electricity), Transnet (commercial rail). And that’s only what’s in the public domain. The scale of the rot is enormous. Their executives spin corporate speak at our commissions of inquiry (Nugent and Zondo) and do not take any accountability!
Paying the money back (as was agreed, and even then my understanding is that not all of it will be repaid, no interest was offered and no criminal charges have been proffered) will never cover for the gutting of essential skills in key state owned enterprises under the cover of a McK “restructuring”.
South Africa is in a perfect storm right now and big consultancies and accounting firms all had their fingers in the cookie jar. They all had a part to play. It makes me sick to think what these consultants might achieve in less democratic states as it’s evident their reach is global and they are legion.
In my university days many bright eyed youth wanted to work for these companies. I hope people are waking up!
Edit: For anyone interested “Zondo Comission McKinsey” or “McKinsey South Africa Guptas” should get you quite far.
Edit2: I’ve just given a brief summary. It’s enlightening to dig into the role of Bain, McKinsey and KPMG especially, their relation to Gupta enterprises (common cause) and their enabling of deals, cutting really good people at key state institutions like SARS (Revenue Service), Eskom (electricity), Transnet (commercial rail). And that’s only what’s in the public domain. The scale of the rot is enormous. Their executives spin corporate speak at our commissions of inquiry (Nugent and Zondo) and do not take any accountability!
Absolutely agree. But to be fair, the problems started with the appointment of useless political cronies as heads of these organisation's, who then used the consultants to help themselves with paybacks, commissions and corrupt deals.
Whether this is a bona fide comment or a troll, I love this comment:
* quick witted aikido-move-of-a-sentence to accept OP's insult, thereby disarming it
* enormous paragraph made up of short, frank, vague sentences with an compelling rhythm of overarching claims that frame the 20-something haircut's ostensible work in a positive light. It's the wrong generation but I'm reading them in Ari Fleischer's no-nonsense, eternally dismissive voice.
* anticipating the accusation of happy talk, a final, single sentence to cover one of the many troubling associations McKinsey has had with shithole companies. Even spelled the industry wrong!
I'm not being sarcastic or snooty. This is the HN-post version of the pharma commercial pattern of showing heartwarming images of happy people on swings while the narrator enumerates horrific side-effects. Reliably distracting an audience from a topic is a skill, and that reliability is valuable to companies.
So to all those naive respondents who want to say that McKinsey is some kind of corporate leech that provides no value-- this very comment is proof that you have no idea what you're talking about.
And some at McKinsey, I assume, are just run of the mill consultents.
* quick witted aikido-move-of-a-sentence to accept OP's insult, thereby disarming it
* enormous paragraph made up of short, frank, vague sentences with an compelling rhythm of overarching claims that frame the 20-something haircut's ostensible work in a positive light. It's the wrong generation but I'm reading them in Ari Fleischer's no-nonsense, eternally dismissive voice.
* anticipating the accusation of happy talk, a final, single sentence to cover one of the many troubling associations McKinsey has had with shithole companies. Even spelled the industry wrong!
I'm not being sarcastic or snooty. This is the HN-post version of the pharma commercial pattern of showing heartwarming images of happy people on swings while the narrator enumerates horrific side-effects. Reliably distracting an audience from a topic is a skill, and that reliability is valuable to companies.
So to all those naive respondents who want to say that McKinsey is some kind of corporate leech that provides no value-- this very comment is proof that you have no idea what you're talking about.
And some at McKinsey, I assume, are just run of the mill consultents.
I guess I'm glad you enjoyed my prose so much.
All I'm trying to convey is that my day to day is listening to client problems, looking at data, talking to employees, and presenting findings. It's neither a conspiracy, nor a scheme, nor a world of wealthy indulgence. I make a healthy wage, but its likely lower than I could get in tech. Like almost every company in the world, its a normal company.
All I'm trying to convey is that my day to day is listening to client problems, looking at data, talking to employees, and presenting findings. It's neither a conspiracy, nor a scheme, nor a world of wealthy indulgence. I make a healthy wage, but its likely lower than I could get in tech. Like almost every company in the world, its a normal company.
Consultancy sounds fancy, but when it comes down to it it's fairly mundane.
I used to be in consultancy as a software dev, it's basically same job, higher cost. But these companies use consultants because they have tons of money but aren't sexy enough to attract internal employees that do the same thing.
I used to be in consultancy as a software dev, it's basically same job, higher cost. But these companies use consultants because they have tons of money but aren't sexy enough to attract internal employees that do the same thing.
> But these companies use consultants because they have tons of money but aren't sexy enough to attract internal employees that do the same thing.
Does not sexy mean they are not willing to spend the tons of money they have on internal employees?
Does not sexy mean they are not willing to spend the tons of money they have on internal employees?
One more piece of the puzzle:
Consultants are easy to fire. Depending on the company's policies, local laws, and the internal politics of the organization, a 'real' employee may be a lot harder to get rid of. Consultants are also time/task limited (in theory), while a 'real' employee is not (again, in theory).
Consultants are easy to fire. Depending on the company's policies, local laws, and the internal politics of the organization, a 'real' employee may be a lot harder to get rid of. Consultants are also time/task limited (in theory), while a 'real' employee is not (again, in theory).
I think this is mixing up 'Management Consultants' vs 'Engineering Consultants/Contractors'.
I'm a (supply chain) consultant which is similar and have a full time contract and full worker protections with my employer. Projects are sold on a fixed price basis, so there isn't anybody to fire - clients are buying the work output or report, not the person or set hours. Some projects are time & materials, but if the project gets cancelled I'm still getting paid - I have a full time contract.
As an example of the value prop - I come with information that your company doesn't necessarily have. Let's say you need to expand your existing (15 year old) miniload ASRS and are locked in with the incumbent provider - I know up-to-date market rates for miniloads and racking, and will be better able to credibly negotiate it down to market rates (particularly as I have probably done a project with the vendor before). I will also be better able to tell you if there is a better solution to expanding the ASRS because, while this is a '1 in 10' year activity for the client, this is what I do every day. Maybe they would be better putting some shuttles in a separate ASRS fed by the miniload because the actual bottleneck is throughput/accessions instead of storage, and their stock profile is different to what it was 15 years ago? They are better than me at running their warehouses, but (hopefully!) I'm better at specifying automation.
So that's the value proposition of consulting - you can get access to very specific expertise that you don't need for long. Most companies don't need a full time expert on specifying warehouse automation!
I'm a (supply chain) consultant which is similar and have a full time contract and full worker protections with my employer. Projects are sold on a fixed price basis, so there isn't anybody to fire - clients are buying the work output or report, not the person or set hours. Some projects are time & materials, but if the project gets cancelled I'm still getting paid - I have a full time contract.
As an example of the value prop - I come with information that your company doesn't necessarily have. Let's say you need to expand your existing (15 year old) miniload ASRS and are locked in with the incumbent provider - I know up-to-date market rates for miniloads and racking, and will be better able to credibly negotiate it down to market rates (particularly as I have probably done a project with the vendor before). I will also be better able to tell you if there is a better solution to expanding the ASRS because, while this is a '1 in 10' year activity for the client, this is what I do every day. Maybe they would be better putting some shuttles in a separate ASRS fed by the miniload because the actual bottleneck is throughput/accessions instead of storage, and their stock profile is different to what it was 15 years ago? They are better than me at running their warehouses, but (hopefully!) I'm better at specifying automation.
So that's the value proposition of consulting - you can get access to very specific expertise that you don't need for long. Most companies don't need a full time expert on specifying warehouse automation!
Second this. Supply Chain tech consultant with one of the big guys here.
They usually want their tech outcomes to be more like Netflix, but they don't want to have a tech-culture. So they bring in the consultants to implement "the digital transformation"!
Exactly.
Being a software "consultant" and a management consultant are pretty different things.
[deleted]
Management consulting is a really different thing to consulting as a developer or specialist..
> It's neither a conspiracy, nor a scheme, nor a world of wealthy indulgence.
The article points to McKinsey's task to "turbocharge" opioid sales, for a company that sold them for "improper use." So there are obviously a few outstanding questions attorneys general are currently asking about what people at McKinsey knew from "listening to client problems, looking at data, talking to employees, and presenting findings" on that campaign.
If you're simply saying that your day to day isn't that, point taken.
The article points to McKinsey's task to "turbocharge" opioid sales, for a company that sold them for "improper use." So there are obviously a few outstanding questions attorneys general are currently asking about what people at McKinsey knew from "listening to client problems, looking at data, talking to employees, and presenting findings" on that campaign.
If you're simply saying that your day to day isn't that, point taken.
> Like almost every company in the world, its a normal company.
This in a thread about McKinsey settling for over half a billion dollars over its role in causing the opioid crisis, which is just one of the many, many arrows in McKinsey’s “aiding and abetting horrible shit” quiver. This was literally a conspiracy and a scheme. On just the basis of “harm caused” alone, McKinsey is far from a normal company.
This in a thread about McKinsey settling for over half a billion dollars over its role in causing the opioid crisis, which is just one of the many, many arrows in McKinsey’s “aiding and abetting horrible shit” quiver. This was literally a conspiracy and a scheme. On just the basis of “harm caused” alone, McKinsey is far from a normal company.
No, this sub-thread is a response to:
> The whole business is a scam built around sending in some 26 year-old with an Ivy League degree and $100 haircut to regurgitate snippets from articles in HBR.
> The whole business is a scam built around sending in some 26 year-old with an Ivy League degree and $100 haircut to regurgitate snippets from articles in HBR.
There are a lot of scammy consultants, but there are also tons of bad employees and whole bad divisions in companies. I run a website design and SEO firm that is highly successful because we actually do the work of building a website and the work of doing the online marketing. Many clients have internal IT or online marketing divisions that are incapable of even making a change to their own website. I find small consulting companies that actually do the work are actually much more valuable per dollar spent than internal employees whose main goal is just to hold on to their job as long as possible and do as little work as they can.
If we were to rank large companies based on how horrible they are to society then certainly McKinsey is indeed “far from a normal company.” They’re far lower than the normal company, in my opinion. I’d go so far as to say they’re not even in the top 75%. Social media, other big (and small) tech, pharma, and banking have caused objectively (and subjectively) orders of magnitude more harm to our society than a bunch of reviled white collar consultants whose only real power is to give a voice to and action plan for all the bad ideas that a company has.
It’s easy to sit here and talk shit about management consultants while forgetting that management consultants aren’t coming up with these ideas in a vacuum. Isn’t the common refrain of an MBA-hater that all consultants like McKinsey do is “parrot back something a lower level grunt already knows”? Someone at the company gave them every idea they’ve ever had, or so the argument goes.
They can’t both be totally useless mouth pieces while also being evil geniuses responsible for this stuff.
It’s easy to sit here and talk shit about management consultants while forgetting that management consultants aren’t coming up with these ideas in a vacuum. Isn’t the common refrain of an MBA-hater that all consultants like McKinsey do is “parrot back something a lower level grunt already knows”? Someone at the company gave them every idea they’ve ever had, or so the argument goes.
They can’t both be totally useless mouth pieces while also being evil geniuses responsible for this stuff.
Having worked at a large management consulting company, the harm isn’t direct but it’s still there. These companies have incredible leverage, but it’s from credentials not competence. Economic harm isn’t as obvious as say water pollution, but diffuse harm is still harm.
Anyway, the average company does all the stuff you don’t really think about like making pots, windows, staplers, hearing aids etc. It’s the extreme outliers that people talk about not the dozen small factories making decorative concrete flagstones, etc.
Anyway, the average company does all the stuff you don’t really think about like making pots, windows, staplers, hearing aids etc. It’s the extreme outliers that people talk about not the dozen small factories making decorative concrete flagstones, etc.
I'm not arguing that the harm isn't there. I'm arguing that the harm they cause is second order and smaller.
And just as a small rebuttal: the small companies are usually owned by larger companies. So while they may not be "the company" people think of, they're still part of "that company." The connection is certainly just as direct as a McKinsey-client connection.
And just as a small rebuttal: the small companies are usually owned by larger companies. So while they may not be "the company" people think of, they're still part of "that company." The connection is certainly just as direct as a McKinsey-client connection.
EXACTLY
Look at it in tech: Some FB engineers are INCREDIBLY smart and good - but the, as you say, "diffuse harm" they do is still *harm*
FFS when I was at Lockheed and we got audited for SOX the execs were stealing stocks from the newer employees and giving those stocks to the execs
and the auditors, I think it was PWC, gave use a green passing grade and employees got fucked.
Some of the execs went on to Solyndra and we all know about how they stole 700 million from the USG...
(look at the SEC claims for Solyndra, where weeks before shutting their employees out without notice, they were giving out huge bonuses to execs and certain employees - e.g. they gave a $40,000 bonus to the IT manager that locked out all the accounts of employees)
Source: That IT guy worked for me at lockheed, the IT CIO was my boss at Lockheed - and I know their level of corruption....
Look at it in tech: Some FB engineers are INCREDIBLY smart and good - but the, as you say, "diffuse harm" they do is still *harm*
FFS when I was at Lockheed and we got audited for SOX the execs were stealing stocks from the newer employees and giving those stocks to the execs
and the auditors, I think it was PWC, gave use a green passing grade and employees got fucked.
Some of the execs went on to Solyndra and we all know about how they stole 700 million from the USG...
(look at the SEC claims for Solyndra, where weeks before shutting their employees out without notice, they were giving out huge bonuses to execs and certain employees - e.g. they gave a $40,000 bonus to the IT manager that locked out all the accounts of employees)
Source: That IT guy worked for me at lockheed, the IT CIO was my boss at Lockheed - and I know their level of corruption....
> Source: That IT guy worked for me at lockheed, the IT CIO was my boss at Lockheed - and I know their level of corruption....
Jesus. Hackernews is one hell of a website
Jesus. Hackernews is one hell of a website
> Social media, other big (and small) tech, pharma, and banking
If you're ordering by importance, I 100% agree with "social media" being at the top of the list, and this almost cannot be emphasized enough.
I say almost because this article is about McKinsey and the role it played in the opioid crises. As an article it's also light on details, so I'm let down that I come to HN-- which is often great at filling in details-- and begin to read low-effort exchanges about the implications of someone's hair cut.
What do people know about McKinsey's relationship with Purdue in this case of pushing opioids into treatments where they didn't belong? I'd like to know more about that. And when I can blithely complain about the shit UX of a billion dollar company on HN and get a direct response from management, I'd expect information from PR nerds about McKinsey's role in the opioid crises and the ongoing lawsuits against them to flow to HN, too.
It isn't productive if we keep hop-scotching over the meat of every article to talk about some other hazard to society that isn't mentioned in the article. If that's going to be the flow then the next article that pops up about Google's monopolistic practices will instantly veer off into whatabout Visa/Mastercard's monopolistic practices, as it did before.
Edit: clarification
If you're ordering by importance, I 100% agree with "social media" being at the top of the list, and this almost cannot be emphasized enough.
I say almost because this article is about McKinsey and the role it played in the opioid crises. As an article it's also light on details, so I'm let down that I come to HN-- which is often great at filling in details-- and begin to read low-effort exchanges about the implications of someone's hair cut.
What do people know about McKinsey's relationship with Purdue in this case of pushing opioids into treatments where they didn't belong? I'd like to know more about that. And when I can blithely complain about the shit UX of a billion dollar company on HN and get a direct response from management, I'd expect information from PR nerds about McKinsey's role in the opioid crises and the ongoing lawsuits against them to flow to HN, too.
It isn't productive if we keep hop-scotching over the meat of every article to talk about some other hazard to society that isn't mentioned in the article. If that's going to be the flow then the next article that pops up about Google's monopolistic practices will instantly veer off into whatabout Visa/Mastercard's monopolistic practices, as it did before.
Edit: clarification
It may be unique only in the regard that the impact directly affects the US citizens, but multinational corporations that work in underdeveloped regions are known for their shady practices. You can probably write 10 articles on Nestle alone.
I’m a physician, the biggest culprit in the opioid crisis is the government. They are the ones that started telling doctors that “pain is the fifth vital sign”. They are the ones that said they would pay doctors based on results of patient surveys - it turns out that addicts wanting opiates from doctors give you bad scores if you don’t give them what they want. And that has nothing to do with capitalism - more the opposite, it shows how good intentions together with the overwhelming force of the government can ruin people’s lives. So maybe we shouldn’t be so quick to encourage the use of government power in those cases where we agree with the political party using that power?
To everyone in this thread who has this overwhelming righteousness indignation about mckinsey - have any of you ever asked your elected representative about their view of the government’s responsibility for the opiate crisis? Would you ever vote differently based on the answers they give? Did any of the state attorney generals who are going after private companies ever do anything to stop the (federal) government encouraging the increased use of pain medication?
This is a classic example of unintended consequences by the government - the companies were just responding to the incentives the government created.
To everyone in this thread who has this overwhelming righteousness indignation about mckinsey - have any of you ever asked your elected representative about their view of the government’s responsibility for the opiate crisis? Would you ever vote differently based on the answers they give? Did any of the state attorney generals who are going after private companies ever do anything to stop the (federal) government encouraging the increased use of pain medication?
This is a classic example of unintended consequences by the government - the companies were just responding to the incentives the government created.
There was a discussion on the experiments by Stanley Milgram about obedience to authority, and it applies here.
When a consultant gets hired for advise or to "get stuff done", and the result of this is massive profits with a secondary effect of death and destruction, then the consultant is (i.m.o.) morally responsible for that second part as well. And, it seems, legally as well (but let me guess nobody goes to jail).
The consultant may have been hired only for the first part, "get stuff done", and the pay may have not been much, but that has nothing to do with responsibility. The minute you understand the possible consequences of the things that you contribute to, you become partly responsible for it.
As the Stanley Milgram experiments show, most people will do horrible things to others when they can tell themselves that someone else is responsible. And, I may add, at the McKinsey level, consultants may even get hired to take on the authority role, to excuse financial crimes, or worse.
When a consultant gets hired for advise or to "get stuff done", and the result of this is massive profits with a secondary effect of death and destruction, then the consultant is (i.m.o.) morally responsible for that second part as well. And, it seems, legally as well (but let me guess nobody goes to jail).
The consultant may have been hired only for the first part, "get stuff done", and the pay may have not been much, but that has nothing to do with responsibility. The minute you understand the possible consequences of the things that you contribute to, you become partly responsible for it.
As the Stanley Milgram experiments show, most people will do horrible things to others when they can tell themselves that someone else is responsible. And, I may add, at the McKinsey level, consultants may even get hired to take on the authority role, to excuse financial crimes, or worse.
As the Stanley Milgram experiments show, most people will do horrible things to others when they can tell themselves that someone else is responsible
Turns out this isn't accurate. See https://theconversation.com/milgram-was-wrong-we-dont-obey-a...
But as my detective work in the Yale Archives has revealed, in the filmed version of the experiment 65% of participants disobeyed. Yet Milgram edited his film to show the opposite: that two-thirds will do as they’re told.
Turns out this isn't accurate. See https://theconversation.com/milgram-was-wrong-we-dont-obey-a...
But as my detective work in the Yale Archives has revealed, in the filmed version of the experiment 65% of participants disobeyed. Yet Milgram edited his film to show the opposite: that two-thirds will do as they’re told.
That still means 35% of people are happy giving others serious electric shocks if told to by an authority figure?
Not as bad as 65% but still pretty bad!
Not as bad as 65% but still pretty bad!
Given the many replications of variations of Milgram's experiments, any flaws in his original experiment don't detract from the overall result.
See https://behavioralscientist.org/how-would-people-behave-in-m... for some of that replication data.
See https://behavioralscientist.org/how-would-people-behave-in-m... for some of that replication data.
Are Instagram engineers partly responsible for depression among teens?
Yes. Even more than McKinsey is responsible for the opioid crisis. Instagram built the evil product, McKinsey just told someone how to better weaponize an already evil product.
Yes.
They have a choice, they are privileged enough to be able to choose where they work.
If they choose to prefer more money over not making more teens depressed. (If that's a thing, I have no idea), then they are responsible.
Generally, most of us in software can choose where to work. If we don't make this choice according to morals (whatever they may be) then we are less moral than ppl who don't have a choice, and those who have a choice and do consider it.
Is that a bad thing? Depending on which morality you subscribe to I guess....
Generally, most of us in software can choose where to work. If we don't make this choice according to morals (whatever they may be) then we are less moral than ppl who don't have a choice, and those who have a choice and do consider it.
Is that a bad thing? Depending on which morality you subscribe to I guess....
The Facebook engineers who tweaked the news feed to change the ratio of positive to negative news absolutely are partly responsible for that.
Remember this one?
https://www.nytimes.com/2014/06/30/technology/facebook-tinke...
> In an academic paper published in conjunction with two university researchers, the company reported that, for one week in January 2012, it had altered the number of positive and negative posts in the news feeds of 689,003 randomly selected users to see what effect the changes had on the tone of the posts the recipients then wrote.
> The researchers found that moods were contagious. The people who saw more positive posts responded by writing more positive posts. Similarly, seeing more negative content prompted the viewers to be more negative in their own posts.
Remember this one?
https://www.nytimes.com/2014/06/30/technology/facebook-tinke...
> In an academic paper published in conjunction with two university researchers, the company reported that, for one week in January 2012, it had altered the number of positive and negative posts in the news feeds of 689,003 randomly selected users to see what effect the changes had on the tone of the posts the recipients then wrote.
> The researchers found that moods were contagious. The people who saw more positive posts responded by writing more positive posts. Similarly, seeing more negative content prompted the viewers to be more negative in their own posts.
I will add they did this experiment partially in response to an academic study that found viewing happier posts on Facebook made people sadder (explained mostly by FOMO).
FB was trying to refute that, and their study was more technically rigorous, but the outcome they were measuring doesn't actually refute the original claim at all IMO. People writing more happy posts on FB does not indicate they are actually happier, it could also be that they wish to broadcast more of their happy moments, or perhaps even just pretend to be happier, in response to the attitude of their feed.
FB was trying to refute that, and their study was more technically rigorous, but the outcome they were measuring doesn't actually refute the original claim at all IMO. People writing more happy posts on FB does not indicate they are actually happier, it could also be that they wish to broadcast more of their happy moments, or perhaps even just pretend to be happier, in response to the attitude of their feed.
Not just partially, but fully. Until then, it's just an idea, and like most ideas, isn't worth much. Implementation is everything*.
*Not everything, which is a tad extreme, but certainly 95%+. But sometimes shocking statements are needed to jolt people into the reality that their work has positive/negative repercussions in the real world. We hold an arms manufacturer responsible for designing weapons of mass destruction, there's no doubt in anyone's mind that there is culpability.
Engineers who build addictive products fall into the same boat. But, but, but paycheque! is not an excuse. Has never been before, isn't now, nor will it ever be in the future. As builders, we are defined by what we build.
*Not everything, which is a tad extreme, but certainly 95%+. But sometimes shocking statements are needed to jolt people into the reality that their work has positive/negative repercussions in the real world. We hold an arms manufacturer responsible for designing weapons of mass destruction, there's no doubt in anyone's mind that there is culpability.
Engineers who build addictive products fall into the same boat. But, but, but paycheque! is not an excuse. Has never been before, isn't now, nor will it ever be in the future. As builders, we are defined by what we build.
Asking the question is answering it.
This series of threads is difficult to respond to because there's three theses floating around
1) McKinsey is basically fraudulent and pretends to do things of value
2) McKinsey is a very bad and unethical firm
3) McKinsey masterminds the business world to enable (1) and/or (2)
The main bit of the subthread is about (1), but this response is about (2). All I have to say is that, yes, consultants should be aware that there are consequences to their actions like any other. I don't think that's in question. I'm not sure the stanley milgram experiments are especially relevant but sure.
1) McKinsey is basically fraudulent and pretends to do things of value
2) McKinsey is a very bad and unethical firm
3) McKinsey masterminds the business world to enable (1) and/or (2)
The main bit of the subthread is about (1), but this response is about (2). All I have to say is that, yes, consultants should be aware that there are consequences to their actions like any other. I don't think that's in question. I'm not sure the stanley milgram experiments are especially relevant but sure.
You are probably getting paid less than you could be but your billable rate is likely substantially higher.
Not great links but you get the gyst...
https://www.afr.com/politics/federal/revealed-mckinsey-partn...
https://www.quora.com/How-much-does-McKinsey-charge
Not great links but you get the gyst...
https://www.afr.com/politics/federal/revealed-mckinsey-partn...
https://www.quora.com/How-much-does-McKinsey-charge
True. I'd note a couple things here though. The per/hour rates are for creating the contract. Actual prices are fixed. The partner rates aren't likely to be charging every day of a project either, and are comparable to lawyer rates. They're expensive, no disagreement there.
Everything you buy has a markup to pay for expenses and make a profit.
Consultants sell their time, so of course their time is marked up.
Consultants sell their time, so of course their time is marked up.
Just because there are ordinary employees at the bottom doing ordinary boring jobs, doesn't mean that this is not a company that has done all sorts of damage.
Most of the huge profits don't go to people like you, but there are huge profits.
The opioid crisis has caused untold suffering and death. The amount of money they were fined is a joke that couldn't make a tiny dent in what fixing this.
It's small enough that it it's unlikely to stop them being involved in something similar in future.
Most of the huge profits don't go to people like you, but there are huge profits.
The opioid crisis has caused untold suffering and death. The amount of money they were fined is a joke that couldn't make a tiny dent in what fixing this.
It's small enough that it it's unlikely to stop them being involved in something similar in future.
To give some color, the revenue from the perdue work was probably (much) less than 10M, profits, less so. McKinsey's total revenue (not profit (based on a google search)), is like $10B. Losing half a billion is a lot.
In this instance I'm more than happy to bring in Godwins rule, but yeah I'm pretty sure there were janitors in the Nazi party as well just doing their job.
>It's neither a conspiracy, nor a scheme, nor a world of wealthy indulgence
But it is a crime the company is responsible for that caused many people to die and become addicted to opioids.
You think Kim Jong Un walks among the people he starves to death on a daily basis in North Korea? No. He's too high up. He's in his palace in the capital and he doesn't even see the real state of his country. He just hears about it in reports and goes to do his day to day job like any other person in a company disconnected from the consequences of their actions.
Does this mean Kim Jong Un is not guilty? No. Not. at. all.
Does this mean McKinsey's is not guilty?
Does this mean you're not guilty?
But it is a crime the company is responsible for that caused many people to die and become addicted to opioids.
You think Kim Jong Un walks among the people he starves to death on a daily basis in North Korea? No. He's too high up. He's in his palace in the capital and he doesn't even see the real state of his country. He just hears about it in reports and goes to do his day to day job like any other person in a company disconnected from the consequences of their actions.
Does this mean Kim Jong Un is not guilty? No. Not. at. all.
Does this mean McKinsey's is not guilty?
Does this mean you're not guilty?
Sounds like everyone is guilty? Not a very useful perspective imo
[deleted]
It's very possible for everyone to be guilty. We don't live in a world where if something isn't "useful" it isn't true.
Your statement ends up reading sort of like "Is every Nazi guilty of the holocaust?" Technically maybe not, doesn't change the fact that of the matter that overall all Nazis are guilty.
You can't run away from this with some garbage statement of "Not a very useful perspective." This incident literally killed an amount of people that is equivalent to a genocide.
Imagine if you were a Nazi and you said that. If you were just a mere guard at one of these concentration camps could you say what you just said to me to a victim who lived through the atrocity? Think about what you should say to the parents of a man/woman who died from an opioid overdose. Literally, I think you're unaware of the magnitude of the crime that was committed here.
Watch these videos:
https://www.youtube.com/watch?v=zGcKURD_osM
https://www.youtube.com/watch?v=mXL3F5HvCr8
Your statement ends up reading sort of like "Is every Nazi guilty of the holocaust?" Technically maybe not, doesn't change the fact that of the matter that overall all Nazis are guilty.
You can't run away from this with some garbage statement of "Not a very useful perspective." This incident literally killed an amount of people that is equivalent to a genocide.
Imagine if you were a Nazi and you said that. If you were just a mere guard at one of these concentration camps could you say what you just said to me to a victim who lived through the atrocity? Think about what you should say to the parents of a man/woman who died from an opioid overdose. Literally, I think you're unaware of the magnitude of the crime that was committed here.
Watch these videos:
https://www.youtube.com/watch?v=zGcKURD_osM
https://www.youtube.com/watch?v=mXL3F5HvCr8
I'm not unaware I have been very personally affected by the opioid crisis. And I don't think the pharma companies are responsible. I haven't met a single opiate addict (and I've met far too many for one lifetime) who blames pharma companies.
They accurately place the blame on themselves.
They accurately place the blame on themselves.
And I know people who have been effected by big pharma. Anecdotal evidence doesn't fly in the face of a journalistic documentary. There's tons of docs on the crisis and the blame is squarely on big pharma.
Do some searching there's tons of articles/video interviews on addicts who got addicted because of pain killers. Here's one: https://www.healthline.com/health/doctor-addicted-opioids
Do some searching there's tons of articles/video interviews on addicts who got addicted because of pain killers. Here's one: https://www.healthline.com/health/doctor-addicted-opioids
And don't forget: there's always a bald guy standing by to disarm the "$100 haircut" conjecture.
It would be hilarious if the grand-grand op went for “I am an 80 year old bald McK......”
> ...run of the mill consultents.
You spelled consultants wrong :P
(Boring clarification: riffing off of your "spelled industry wrong!" bit. Not an actual attack.)
I definitely need to learn lucidity or awareness or whatever it is that you springboard off of to be able to read something like this and mentally *hangonaminute* though... I completely went along agreeing with everything, and while I still do after having paused and considered, this isn't the first time I've needed another comment to help with the initial "you're completely not noticing this subtlety here".
You spelled consultants wrong :P
(Boring clarification: riffing off of your "spelled industry wrong!" bit. Not an actual attack.)
I definitely need to learn lucidity or awareness or whatever it is that you springboard off of to be able to read something like this and mentally *hangonaminute* though... I completely went along agreeing with everything, and while I still do after having paused and considered, this isn't the first time I've needed another comment to help with the initial "you're completely not noticing this subtlety here".
>You spelled consultants wrong :P
I assume that was intentional.
I assume that was intentional.
All valid points, but diluting them a bit by accusing others of spelling mistakes when committing them yourself.
s/consultents/consultants/
s/consultents/consultants/
That was most certainly a joke. He called out that grandparent made a typo in the last sentence and drove that home again by also making a typo in the last sentence when referencing grandparent's role. I had a good laugh.
> 20-something haircut's ostensible work
I read your comment as "I am so emotionally invested in this caricature that I cannot tolerate hearing it humanized. The caricature must stand, or I lose something."
I know very little about McKinsey, but I don't think that the haircut of their consultants tells me very much.
I read your comment as "I am so emotionally invested in this caricature that I cannot tolerate hearing it humanized. The caricature must stand, or I lose something."
I know very little about McKinsey, but I don't think that the haircut of their consultants tells me very much.
They are great at making PowerPoint’s though.
>the many troubling associations McKinsey has had with shithole companies.
not only shithole companies. At the total service of shithole governments:
"McKinsey Bans Moscow Staff From Attending Pro-Navalny Protest
...
In line with policy, McKinsey employees must not support any political activity either publicly or privately. This ban does include posts in social media featuring your political views or your attitude to any action with a political flavour. This line of conduct is mandatory. "
https://www.themoscowtimes.com/2021/01/23/mckinsey-bans-mosc...
not only shithole companies. At the total service of shithole governments:
"McKinsey Bans Moscow Staff From Attending Pro-Navalny Protest
...
In line with policy, McKinsey employees must not support any political activity either publicly or privately. This ban does include posts in social media featuring your political views or your attitude to any action with a political flavour. This line of conduct is mandatory. "
https://www.themoscowtimes.com/2021/01/23/mckinsey-bans-mosc...
That message was genuine, but quickly retracted and apologized for. That's not a real policy.
In Russia everyone knows which of those 2 messages is the real one guiding your cushy employment there, and which one is just a PR BS which was produced after people like Ted Cruz cried foul in the US .
I call bullshit on this email being sent by the firm until I see it (though I totally believe it may have been sent by someone working at the Moscow office)
Grounds:
- it goes directly against several key employees rights policies which we are reminded of by the firm itself several times a year
- its formulation is very different from the firm's language in across-the-board communications
Grounds:
- it goes directly against several key employees rights policies which we are reminded of by the firm itself several times a year
- its formulation is very different from the firm's language in across-the-board communications
>I call bullshit on this email being sent by the firm until I see it
The firm didn't deny it. It issued retraction. So, it is genuine. And the firm wants the Russian regime to know that it is genuine. All that absolutely not surprising given the Russian environment.
>- it goes directly against several key employees rights policies which we are reminded of by the firm itself several times a year
nor policy nor "employees rights" (who is going to enforce them? Russian gov-t?) are worth losing GazProm and Norilsknickel as clients and becoming political enemy of Putin. People in Russia are arrested today for just retweet of a thread mentioning the date of protests (like that RBC editor).
The firm didn't deny it. It issued retraction. So, it is genuine. And the firm wants the Russian regime to know that it is genuine. All that absolutely not surprising given the Russian environment.
>- it goes directly against several key employees rights policies which we are reminded of by the firm itself several times a year
nor policy nor "employees rights" (who is going to enforce them? Russian gov-t?) are worth losing GazProm and Norilsknickel as clients and becoming political enemy of Putin. People in Russia are arrested today for just retweet of a thread mentioning the date of protests (like that RBC editor).
> Ari Fleischer
Honestly I got more of a '1 life is a tragedy, 1million lives is a statistic' vibe from GP
Honestly I got more of a '1 life is a tragedy, 1million lives is a statistic' vibe from GP
>*This is the HN-post version of the pharma commercial pattern of showing heartwarming images of happy people on swings while the narrator enumerates horrific side-effects.*
OMG this is the bes sentence I have read in months! Thanks
---
I worked with a guy who was a previous McKinsey exec and now is the "uber of Dubai" founder and a billionaire and he is slimy AF.
I have worked with multiple companies such as McKinsey PWC and others and their consulting practices are all bullshit.
Now, thats not to say that any large company does not need some financial oversight/consulting/auditing - but still these consultancies are fucking vultures and are more likely to help you "cook your books" than correct your books...
OMG this is the bes sentence I have read in months! Thanks
---
I worked with a guy who was a previous McKinsey exec and now is the "uber of Dubai" founder and a billionaire and he is slimy AF.
I have worked with multiple companies such as McKinsey PWC and others and their consulting practices are all bullshit.
Now, thats not to say that any large company does not need some financial oversight/consulting/auditing - but still these consultancies are fucking vultures and are more likely to help you "cook your books" than correct your books...
“Opiod work was bad though, let's not avoid that.” Great, so let’s not avoid that - with your insider perspective:
In what ways do you see McKinsey’s actions with Purdue Pharma as being bad? In what ways were they typical of McKinsey’s behavior with other clients? In what ways do you see the actions with Purdue as being exceptional for McK? What factors allowed the company to act as it did? Have those factors been addressed? How do the events with Purdue show what has and hasn’t changed since McKinsey’s deep involvement with Enron?
In what ways do you see McKinsey’s actions with Purdue Pharma as being bad? In what ways were they typical of McKinsey’s behavior with other clients? In what ways do you see the actions with Purdue as being exceptional for McK? What factors allowed the company to act as it did? Have those factors been addressed? How do the events with Purdue show what has and hasn’t changed since McKinsey’s deep involvement with Enron?
> In what ways do you see McKinsey’s actions with Purdue Pharma as being bad?
I think it's mostly self evident.
> In what ways were they typical of McKinsey’s behavior with other clients? In what ways do you see the actions with Purdue as being exceptional for McK? What factors allowed the company to act as it did? Have those factors been addressed?
McK is large and very decentralized, and there's a culture of not talking about work to avoid creating conflicts of interest, so it's easy for one partner to end up doing their own thing in a way that the majority would not agree with. The Opioid work had a spin on it with the rebates that I recall had a mind towards preventing them, but I cannot remember the details so I won't pretend that's supposed to be compelling at all.
The work with Opioids, and I would also call out ICE, were high profile struggles internally that have been addressed numerous times by top level leadership on global calls, in a way that I thought was emotionally empathetic to the situation. Voicing dissenting opinions is encouraged, and I think people were free to voice grievances. They have since created a committee whereby other unrelated partners need to review proposals for ethics before it gets approved.
If you work for facebook, you build facebook. If you work for mckinsey, you may work on improving access to renewable energy, automaker margins, oil and gas marketing, or pro bono human rights work. Most people will fall into one of the neutral categories. To what degree are you accountable for a few guys doing something completely different that have no particular connection to you? I don't know. It's a weird dynamic but I would say "a bit, but less than a more traditional centralized company". I feel convinced that top level leadership is taking reasonable steps to address ethical issues and the the broad general population of the firm wants to encourage this. I don't know if it's possible to fully prevent bad decisions in the long term. From an external perspective, there's always going to be just one McKinsey, and that's tough to reconcile.
I can't say I know anything about Enron.
I think it's mostly self evident.
> In what ways were they typical of McKinsey’s behavior with other clients? In what ways do you see the actions with Purdue as being exceptional for McK? What factors allowed the company to act as it did? Have those factors been addressed?
McK is large and very decentralized, and there's a culture of not talking about work to avoid creating conflicts of interest, so it's easy for one partner to end up doing their own thing in a way that the majority would not agree with. The Opioid work had a spin on it with the rebates that I recall had a mind towards preventing them, but I cannot remember the details so I won't pretend that's supposed to be compelling at all.
The work with Opioids, and I would also call out ICE, were high profile struggles internally that have been addressed numerous times by top level leadership on global calls, in a way that I thought was emotionally empathetic to the situation. Voicing dissenting opinions is encouraged, and I think people were free to voice grievances. They have since created a committee whereby other unrelated partners need to review proposals for ethics before it gets approved.
If you work for facebook, you build facebook. If you work for mckinsey, you may work on improving access to renewable energy, automaker margins, oil and gas marketing, or pro bono human rights work. Most people will fall into one of the neutral categories. To what degree are you accountable for a few guys doing something completely different that have no particular connection to you? I don't know. It's a weird dynamic but I would say "a bit, but less than a more traditional centralized company". I feel convinced that top level leadership is taking reasonable steps to address ethical issues and the the broad general population of the firm wants to encourage this. I don't know if it's possible to fully prevent bad decisions in the long term. From an external perspective, there's always going to be just one McKinsey, and that's tough to reconcile.
I can't say I know anything about Enron.
As a person you are surely good, as an employee of that organization you are a tool to extract as much money as possible from your client and most often than not the person who hired you guys should be fired for having done so. As a 20-something year old generalist you are in no position to be giving "advice" (especially at the rate you charge) considering that "business is hard".
> That's not evidence of abuse, that's evidence that your org isn't working well
Mostly fuelled by management consultancy firms' marketing and sales teams, of course.
Mostly fuelled by management consultancy firms' marketing and sales teams, of course.
As someone who worked with McKinsey consultants in a past life, this seems pretty spot on. The partner and one of their associates were sharp. The other associate mostly got arrogant. They were brought in around a new product line I was the product manager of. Yes, they spent lots of time interviewing us and basically validated what we told them.
That said, they presumably gave executive management some warm and fuzzies that we weren't smoking weed. Sure, they could have just taken our word for what we were telling them, but having a second pair of eyes is actually not a terrible thing. (And it's part of what I did for clients in a subsequent job.) They also gave our business planning people some complicated financial modeling spreadsheet which kept them busy and mostly out of our hair.)
That said, they presumably gave executive management some warm and fuzzies that we weren't smoking weed. Sure, they could have just taken our word for what we were telling them, but having a second pair of eyes is actually not a terrible thing. (And it's part of what I did for clients in a subsequent job.) They also gave our business planning people some complicated financial modeling spreadsheet which kept them busy and mostly out of our hair.)
Can we just keep it real instead of spouting this garbage. I've worked alongside and gotten close with consultants on the business/management side having been one in software myself.
99% of the consultants who come in are human Powerpoint/Email factories who just happen to have the skill/trait of being extremely insistent. They push exactly what their client wants to hear and are not doing groundbreaking worldchanging work.
In fact in almost every case I worked on, most of the team had literally NEVER done any work in the clients field before, and never performed in the functional role they were being assigned to outside of maybe the partner or project leader assigned to the case who likely had a PHD/MD of some kind in the related field.
As others said, they are there as an insurance policy to throw blame.
99% of the consultants who come in are human Powerpoint/Email factories who just happen to have the skill/trait of being extremely insistent. They push exactly what their client wants to hear and are not doing groundbreaking worldchanging work.
In fact in almost every case I worked on, most of the team had literally NEVER done any work in the clients field before, and never performed in the functional role they were being assigned to outside of maybe the partner or project leader assigned to the case who likely had a PHD/MD of some kind in the related field.
As others said, they are there as an insurance policy to throw blame.
A big part of what consultants bring is repeat experience — when you’ve watched multiple clients make the same mistakes, you can credibly speak up.
And for the kind of transformational work that folks like McKinsey would come in to assess, there’s a huge organizational component that’s actually more complex than the technical components. Building a new technology tool is great, but designing the process the tool implements and rolling it out to non-technical users is the job our buyers hire us to do. We would hire offshore engineers if the engineering work were the majority of the work we do — but the coordination overhead is too high.
And for the kind of transformational work that folks like McKinsey would come in to assess, there’s a huge organizational component that’s actually more complex than the technical components. Building a new technology tool is great, but designing the process the tool implements and rolling it out to non-technical users is the job our buyers hire us to do. We would hire offshore engineers if the engineering work were the majority of the work we do — but the coordination overhead is too high.
It's also funny that people can simultaneously say that McKinsey is self-serving and does no real work for their clients, and also that they caused the opioid crisis with their involvement with Purdue. Which one is it?
20 year olds out of university know nothing about business, management, finance or the economy. The financial system and economy are in a constant state of flux, everything they teach in university is already outdated 10 years before you even start the degree.
As for economics, most of what they teach has nothing to do with the real economy; just some phony models with fancy math which bear absolutely no relationship to the actual current state of the economy.
Any executive who can benefit from the advice of a 20 year old shouldn't be in a leadership position in the first place.
If it's that obvious, stop to think about a few things.
Why is management consulting a billion dollar industry? Are there that many clueless executives running F500 companies (pretty much all of them).
Or perhaps your understanding of management consulting isn't quite right.
Why is management consulting a billion dollar industry? Are there that many clueless executives running F500 companies (pretty much all of them).
Or perhaps your understanding of management consulting isn't quite right.
>> Why is management consulting a billion dollar industry?
Because most rich people are idiots but they have direct access to money printers via hundreds of legal money laundering schemes going on in the background so they can afford to waste as much of it as they want on whatever they want and still be profitable.
Because most rich people are idiots but they have direct access to money printers via hundreds of legal money laundering schemes going on in the background so they can afford to waste as much of it as they want on whatever they want and still be profitable.
Consultants are not expected to just know the answer. They're supposed to figure it out by talking to people in the company and looking at data. A 20 year old with full DB access and a python script can tell an executive a lot of things they don't know.
Agreed, starting my career as an in-house data analyst at a mid-sized public software company, I was able to show executives things they didn't know within a few months. Not because I was particularly smart, but because there was so much low hanging fruit.
While I disagreed with him on this point, here's another angle on how low hanging the fruit was: My manager _explicitly_ told us to never use statistics, because we'd be wasting our time with effects which weren't large enough to be obvious.
While I disagreed with him on this point, here's another angle on how low hanging the fruit was: My manager _explicitly_ told us to never use statistics, because we'd be wasting our time with effects which weren't large enough to be obvious.
I'll add one more point to this. Some business executives bring in consultants as a CYA for their boards, employees, etc.
> "Bringing in consultants is, among other ways, a way to bring in people who can get shit done, moving bricks at lower levels of the org with the political mandate of the top."
Or, to put it another way: You hire a consultant so you can avoid responsibility for your decisions.
"I didn't just fire thousands of people, possibly putting some out on the streets. Nope. We're just right-sizing the company based on the advice of this well-respected consultant with a nice haircut."
Hire a consultant and get a fall guy and the ability to shirk responsibility for the detrimental impact your decisions have on your workforce.
Or, to put it another way: You hire a consultant so you can avoid responsibility for your decisions.
"I didn't just fire thousands of people, possibly putting some out on the streets. Nope. We're just right-sizing the company based on the advice of this well-respected consultant with a nice haircut."
Hire a consultant and get a fall guy and the ability to shirk responsibility for the detrimental impact your decisions have on your workforce.
I’ve worked with McKinsey on 3 different projects at two companies. One project was honestly helpful in trying to get SAP up and running. The other two were worthless, including a strategy deck about CPG food strategy in China. They basically just took our data and the results we had already provided and had a charismatic speaker (Partner?) who worked in China come in and tell the same story. The few original slides they brought were probably all the same nonsense macroeconomic slides they show to everyone remotely interested in Developing markets like China. The CFO was unimpressed and though they still use them for things, we would never go back for Strategy. For the cost we paid for one month of the engagement I could have hired an MBA analyst/manager working full time doing much of this in house.
I personally will not use a big consulting company until we do a better job of forcing consultants to have more skin in the outcome. It’s really nice to come in, have a flashy presentation and then walk out and collect your money. The only “getting shit done” I’ve seen McKinsey do is lining their own pockets.
I personally will not use a big consulting company until we do a better job of forcing consultants to have more skin in the outcome. It’s really nice to come in, have a flashy presentation and then walk out and collect your money. The only “getting shit done” I’ve seen McKinsey do is lining their own pockets.
McKinsey does a lot of "Fees at risk" engagements where they are paid conditional to the outcome
Man, you're really getting the short end of the stick here - it's actually pretty surprising because even though the forum is tech heavy, you wouldn't expect this much hate on consulting as a business model.
Outliers like the Opioid stuff aside, I do think most day to day typical things that consultants do is valuable work for companies. Say you're launching a new product and want to figure out cost based / value based pricing - it's either a single person in the company that does that that might not have a lot of experience in that area or a consultant from a consulting company that has a good track record at doing value based pricing specifically. I know who I'm going to pick.
Outliers like the Opioid stuff aside, I do think most day to day typical things that consultants do is valuable work for companies. Say you're launching a new product and want to figure out cost based / value based pricing - it's either a single person in the company that does that that might not have a lot of experience in that area or a consultant from a consulting company that has a good track record at doing value based pricing specifically. I know who I'm going to pick.
People have a natural aversion to consultants. They're expensive and accomplish things that feel like they should be easy but in practice are hard. It's also difficult because the opioids work is bad, and there have been other things that are just bad. I don't think its especially representative of the work most people do but its still there and the harm is real. A piece of bad work is probably 12ish people doing their own thing that the majority would tell them not to do. I feel good about the work that I do, not just in that it doesn't harm anyone but in that I think it has positive side effects for society. The opioids work doesn't really affect me, and was hardly financially relevant for the company (before the fine). To give a throwaway fictitious answer, if my job was aiding COVID vaccines or helping education in poor countries, things that I don't have direct knowledge of, but would probably guess McK is involved in without any particular knowledge, I don't know how many "bad" actors or incidents it would take in other unrelated aspects of the firm to get me to not want to work there anymore.
There's no big picture. I can't say my work "enables" others to do other work that I may disagree with. On the whole of it by my personal set of values, I enjoy being able to make the contributions I do and would be wary of loosing that. So long as the tone at the top of the org is condemning of things I consider bad (and it is), I think it deserves a level of understanding for how difficult it is to run a network of thousands of partners and avoid things like this. I'm optimistic that the newly enforced sets of checks and balances will prevent such at least some of these kinds of studies from happening again. For now at least, it feels less like "McKinsey" did the bad thing and more like "a group of people who work here" did. Others will disagree, and I get it. I know a couple folks who left on ethical grounds and they retained the support of all their colleagues.
There's no big picture. I can't say my work "enables" others to do other work that I may disagree with. On the whole of it by my personal set of values, I enjoy being able to make the contributions I do and would be wary of loosing that. So long as the tone at the top of the org is condemning of things I consider bad (and it is), I think it deserves a level of understanding for how difficult it is to run a network of thousands of partners and avoid things like this. I'm optimistic that the newly enforced sets of checks and balances will prevent such at least some of these kinds of studies from happening again. For now at least, it feels less like "McKinsey" did the bad thing and more like "a group of people who work here" did. Others will disagree, and I get it. I know a couple folks who left on ethical grounds and they retained the support of all their colleagues.
I know it's fashionable to hate on MBAs, but I am not entirely convinced engineers are any better equipped with skills such as: requirements gathering, scoping, presenting, project management, competitive research, financial modeling, memo writing, and strategic planning. I don't believe these are truly vacuous activities, and - loathe as I am to say - MBAs may be the best trained to do this.
(Disclosure: I do not have an MBA)
(Disclosure: I do not have an MBA)
This is about a specific consulting company, not MBAs in general.
I agree with this - young engineers typically do not appreciate the importance of building the right thing vs building it well. However, the OPs point stands. McKinsey and these other companies just regurgitate what is printed in the trade press and charge you top dollars for it. You meet an experienced person once at project kickoff, and then most of your contacts are fresh grads with 2-5 years of experience. They really specialize in attending meetings and conference calls, but are all over the place (from excellent to awful) at actually implementing things.
I'm fine stating that engineers from non-elite schools are just as well equipped for the tasks you describe, but that wasn't the GP's contention. The point is that McKinsey make bad recommendations that have demonstrably bad outcomes.
Their fingerprints are all over numerous bad decisions in business and government in the past few decades[0]. These are the bare minimum, because there are quite likely many negative outcomes they have championed in their role as consultants that were never publicized or reported on.
Totally separate from the above is their absolutely mercenary tendency to work with anyone who will pay them[1][2].
[0] - https://en.wikipedia.org/wiki/McKinsey_%26_Company#Controver... [1] - https://www.nytimes.com/2018/12/15/world/asia/mckinsey-china... [2] - https://www.newyorker.com/news/news-desk/mckinseys-work-for-...
Their fingerprints are all over numerous bad decisions in business and government in the past few decades[0]. These are the bare minimum, because there are quite likely many negative outcomes they have championed in their role as consultants that were never publicized or reported on.
Totally separate from the above is their absolutely mercenary tendency to work with anyone who will pay them[1][2].
[0] - https://en.wikipedia.org/wiki/McKinsey_%26_Company#Controver... [1] - https://www.nytimes.com/2018/12/15/world/asia/mckinsey-china... [2] - https://www.newyorker.com/news/news-desk/mckinseys-work-for-...
McKinsey has 27,000 employees. That's the population of an entire town. I'm not saying that the things described in the links you posted here aren't bad, but I think it's important to remember with this many employees, there will always be someone doing something that you don't agree with.
To be clear: Is your assertion that, because these outcomes aren't a deliberate conspiracy, we have to let them happen because of... what, exactly? Whether it's an emergent feature of this style of consulting or a firm consisting of the worst human beings is besides the point.
Elite management consulting firms (McKinsey, Deloitte, Bain, etc) exist to enable the worst impulses of leadership across the spectrum. The ends certainly justify scrutinizing the means.
Elite management consulting firms (McKinsey, Deloitte, Bain, etc) exist to enable the worst impulses of leadership across the spectrum. The ends certainly justify scrutinizing the means.
This assertion is both true and irrelevant. Try:
"Comcast customer service has a huge number of employees. I'm not saying there aren't jerks in there, but..."
Devolving corporate responsibility (for the bad stuff) to individuals is of course the corporate preference. But at some point you run in to the "only the best people" problem - McKinsey hires them, trains them, assigns them and pays them, no matter how slippery McKinsey PR is, I keep seeing that name, McKinsey.
"Comcast customer service has a huge number of employees. I'm not saying there aren't jerks in there, but..."
Devolving corporate responsibility (for the bad stuff) to individuals is of course the corporate preference. But at some point you run in to the "only the best people" problem - McKinsey hires them, trains them, assigns them and pays them, no matter how slippery McKinsey PR is, I keep seeing that name, McKinsey.
Cherry picking bad examples is not how to evaluate how often McKinsey "make bad recommendations that have demonstrably bad outcomes".
Any company the size of McKinsey around as long as McKinsey will have success and failure stories.
The proper way to evalaute is to take all things McKinsey did, normalize for background, and see how it performs compared to other methods of solving the same problems.
Cherry picking to make a claim is the 2nd worst form of evidence, outranked only by outright lying.
Any company the size of McKinsey around as long as McKinsey will have success and failure stories.
The proper way to evalaute is to take all things McKinsey did, normalize for background, and see how it performs compared to other methods of solving the same problems.
Cherry picking to make a claim is the 2nd worst form of evidence, outranked only by outright lying.
Great comment. I might go further and say that cherry-picking is either an attempt to deceive the listener or oneself. I’d put it on the same pedestal as lying.
"We can never criticize something unless we can contemplate the totality of it" isn't constructive or helpful and has (from my interpretation) the net effect of stating the the status quo is fine. Is that what you're contending?
Firms like McKinsey, for reasons of trade secrets, confidentiality wrt their client book, discretion because of the nature of their work, etc don't have data available about the completeness of their outcomes. In fact, their white papers focus exclusively on successes. What about instances where their contribution has a not-zero impact (we could even include and offset the cost of their consultations against the total impact of advise offered, assuming it's followed)? Do you have a proposal for how to conduct such an analysis?
Furthermore, I would offer that much of the nature of their impacts isn't something we can know with mathematical precision and exists in the realms of the social sciences (a broad domain known to have major skew problems when measurements are taken, if at all).
So we are left with optics and moral/ethical assessments of the work they have done. Taking this into account, I am content with this approach and the conclusions I have arrived at.
Firms like McKinsey, for reasons of trade secrets, confidentiality wrt their client book, discretion because of the nature of their work, etc don't have data available about the completeness of their outcomes. In fact, their white papers focus exclusively on successes. What about instances where their contribution has a not-zero impact (we could even include and offset the cost of their consultations against the total impact of advise offered, assuming it's followed)? Do you have a proposal for how to conduct such an analysis?
Furthermore, I would offer that much of the nature of their impacts isn't something we can know with mathematical precision and exists in the realms of the social sciences (a broad domain known to have major skew problems when measurements are taken, if at all).
So we are left with optics and moral/ethical assessments of the work they have done. Taking this into account, I am content with this approach and the conclusions I have arrived at.
>"We can never criticize something unless we can contemplate the totality of it" isn't constructive or helpful
But you're ok with cherry picking events to suit a narrative when advocating for change? Did you even try to find examples where they were successful in your eyes, or did you simply pick the examples that suit your claims?
>Do you have a proposal for how to conduct such an analysis?
Simply looking at how many customers are repeat customers shows that they're at least doing something their customers are willing to pay for. That's easily a vastly better metric then simply cherry picking examples on one side of an argument.
I'd suspect that current customers are vastly more aware of what value they provide than you'd pick up from news stories, especially if, as you contend, there's no way to know these details from outside views.
They've been around 95 years, 27k employees, 10B in annual revenue, a client list that is incredibly diverse, among every sector of society, among all political parties, and including a huge number of worldwide governments and companies. That alone should make you realize perhaps there is value in what they do, that thousands of customers think so, and that trying to paint them as "McKinsey make bad recommendations that have demonstrably bad outcomes." is probably vastly short-sighted.
You then double down and claim it's probably even worse if one could see inside.
I would weight the opinions of their customers over those obviously cherry picking examples then making un-nuanced and sweeping generalizations. I am content with that approach. Seems more evidence based.
But you're ok with cherry picking events to suit a narrative when advocating for change? Did you even try to find examples where they were successful in your eyes, or did you simply pick the examples that suit your claims?
>Do you have a proposal for how to conduct such an analysis?
Simply looking at how many customers are repeat customers shows that they're at least doing something their customers are willing to pay for. That's easily a vastly better metric then simply cherry picking examples on one side of an argument.
I'd suspect that current customers are vastly more aware of what value they provide than you'd pick up from news stories, especially if, as you contend, there's no way to know these details from outside views.
They've been around 95 years, 27k employees, 10B in annual revenue, a client list that is incredibly diverse, among every sector of society, among all political parties, and including a huge number of worldwide governments and companies. That alone should make you realize perhaps there is value in what they do, that thousands of customers think so, and that trying to paint them as "McKinsey make bad recommendations that have demonstrably bad outcomes." is probably vastly short-sighted.
You then double down and claim it's probably even worse if one could see inside.
I would weight the opinions of their customers over those obviously cherry picking examples then making un-nuanced and sweeping generalizations. I am content with that approach. Seems more evidence based.
Getting an MBA right now is a clear signal that you have zero skills.
Its a people problem. Actually solving problems takes a particular kind of mind. A degree is just a piece of paper which certifies the fact that you sat through lectures on subjects and you successfully regurgitated said lecture material on another piece of paper from memory.
The issue with the MBA field is that it tends to attract power hungry narcissists/psychopaths who enjoy holding power over others. Engineers like to tinker with stuff and be left alone.
The issue with the MBA field is that it tends to attract power hungry narcissists/psychopaths who enjoy holding power over others. Engineers like to tinker with stuff and be left alone.
Posting this comment on a website dedicated to self-promotion of engineers who want to get rich quickly is an interesting choice.
The problem are not MBA's. The problem is that the incentive of consulting companies are not aligned with the incentive of their clients.
Take a big construction project. In the like of the Berlin airport. What do you think is more profitable for the consulting companies :
a) A well thought project, done in budget and in time. Where the consulting company gets the whole contract + all the bonuses associated with it.
b) A poorly managed project, that gets refinanced multiple times and that ends up being pushed back decades.
It's actually B. Consulting companies love long projects, because this allows them to place consultant for extended periods of time. And any consultant working for a client is a profitable consultant event without bonuses. Consulting companies hate projects that end up shorter than expected, because any bonus they might get from that project ends up being spent on consultant that are waiting for their next assignment.
The main KPI of any consulting company is "the %age of time you consultant are spending 'on assignment' vs 'on the bench'". And long projects where consultant are busy for years are the best way to bring that KPI to 100%, even when the underlying project is a complete mess. The only thing they get from shorter and better managed projects is a better image, which is easier and less expensive to get using marketing technique and PR.
Take a big construction project. In the like of the Berlin airport. What do you think is more profitable for the consulting companies :
a) A well thought project, done in budget and in time. Where the consulting company gets the whole contract + all the bonuses associated with it.
b) A poorly managed project, that gets refinanced multiple times and that ends up being pushed back decades.
It's actually B. Consulting companies love long projects, because this allows them to place consultant for extended periods of time. And any consultant working for a client is a profitable consultant event without bonuses. Consulting companies hate projects that end up shorter than expected, because any bonus they might get from that project ends up being spent on consultant that are waiting for their next assignment.
The main KPI of any consulting company is "the %age of time you consultant are spending 'on assignment' vs 'on the bench'". And long projects where consultant are busy for years are the best way to bring that KPI to 100%, even when the underlying project is a complete mess. The only thing they get from shorter and better managed projects is a better image, which is easier and less expensive to get using marketing technique and PR.
Yes, and I agree with all the child comments. The principal-agent cost with consulting firms is enormous. In the most uncharitable light, their business model is a wealth transfer insofar as their profit derives directly from maximizing this cost.
Your complaints apply exactly as well to the internal employees.
Your point about incentives is exactly the structural problem here. I've been a consultant years ago and on a human level we loved projects that ran well. You feel good about yourself and your team for helping the client quickly and efficiently.
However, zooming out, it's the incentive system that's completely broken: there is no skin in the game. Consulting firms are too detached from the consequences of their advice. Nassim Nicholas Taleb wrote a nice book about this phenomenon: https://en.wikipedia.org/wiki/Skin_in_the_Game_(book)
However, zooming out, it's the incentive system that's completely broken: there is no skin in the game. Consulting firms are too detached from the consequences of their advice. Nassim Nicholas Taleb wrote a nice book about this phenomenon: https://en.wikipedia.org/wiki/Skin_in_the_Game_(book)
I’m with ya hear. It’s actually one of the reasons I love start-ups.
You get to recommend a better approach to an industry or technology and then go off and do it all while having equity in the company.
You get to recommend a better approach to an industry or technology and then go off and do it all while having equity in the company.
Yet, a consulting company that constantly has overrun projects won’t get repeat business nearly as much as the company that comes in and gets things done. PR and marketing may help you land your first project with a client, but it’s only good work that will keep that client coming back to you. Otherwise they’ll replace you with different consultants.
This is slightly different (SI/Mgmt consultants vs Strategy consultants) but my experience with SI consultancies was that mid/lower consultants were rewarded based on chaos and fixing chaos not on avoiding chaos.
So if you oversaw the build-out of a system and everything went smoothly, good, but nothing to talk about during promotions.
On the other hand, if there were difficult issues faced and you fire-fought, sent out late emails with decisions to clients, came up with memos documenting tricky situations, awesome! Promotion material!
Of course, sharp consultants figured this out and the sharpest ones looked the other way when design documents had landmines -- just so they had known manageable issues to "manage" and "save the day" with.
Bad incentives, bad outcomes.
So if you oversaw the build-out of a system and everything went smoothly, good, but nothing to talk about during promotions.
On the other hand, if there were difficult issues faced and you fire-fought, sent out late emails with decisions to clients, came up with memos documenting tricky situations, awesome! Promotion material!
Of course, sharp consultants figured this out and the sharpest ones looked the other way when design documents had landmines -- just so they had known manageable issues to "manage" and "save the day" with.
Bad incentives, bad outcomes.
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I'm fairly sure it's much easier to teach engineers how to business than it is to teach MBAs how to engineer.
Maybe companies hire MBAs as a perk/morale-booster for the engineers, so they have someone to unite in their hate against and not fight with each other over their failures.
It’s Scientology for businesses.
Scientology literally has a business consulting front.
https://en.wikipedia.org/wiki/Sterling_Management
https://en.wikipedia.org/wiki/Sterling_Management
This sounds rather dismissive. The company (and others like it) has been around for decades. Most of Fortune 500 has leaned on their advice multiple times, and their advice doesn't come cheap. So your implication is that these companies are being scammed into repeatedly wasting their money and are apparently not smart enough to figure this out. To me, that feels hard to believe.
It's conceivable McK and other actually do offer some value. A 26 year-old may not have tons of real world experience, but working at McK would allow him/her to have exposure to a global team that has worked across many companies in the industry. Having an understanding of best practices across multiple companies in the industry is valuable. It's also valuable to come in with a fresh perspective that is not heavily influenced by working at the same company for decades.
It's conceivable McK and other actually do offer some value. A 26 year-old may not have tons of real world experience, but working at McK would allow him/her to have exposure to a global team that has worked across many companies in the industry. Having an understanding of best practices across multiple companies in the industry is valuable. It's also valuable to come in with a fresh perspective that is not heavily influenced by working at the same company for decades.
And some fast food chains sell crappy food. So what? Nobody is forced to hire a (bad) consulting firm. Also if management accepts and implements the bad advise of a consulting firm, that management is even worse, isn't it.
Once you realize the game is “management” in collusion on both (a) outsourcing the reading of the HBR articles so they don’t have to, and (b) what I call “decision insurance” (“but our consultants confirmed this made sense!”) so decision accountability is laundered, everything makes much more sense.
In mega enterprises the CEO matters a lot, but the next 3 or 4 layers often exist primarily to filter and spin bad news, diffuse accountability, and occasionally get burned at the stake as a witch in league with evil spirits when nobody wants to acknowledge the cholera water making the whole village ill.
Given that, the easiest witch to lay hands on is the consultant, which is why they bill hazardous duty pay levels.
In mega enterprises the CEO matters a lot, but the next 3 or 4 layers often exist primarily to filter and spin bad news, diffuse accountability, and occasionally get burned at the stake as a witch in league with evil spirits when nobody wants to acknowledge the cholera water making the whole village ill.
Given that, the easiest witch to lay hands on is the consultant, which is why they bill hazardous duty pay levels.
> what I call “decision insurance” (“but our consultants confirmed this made sense!”) so decision accountability is laundered, everything makes much more sense.
I hear this all the time but it sounds like an urban myth.
I highly doubt someone is not getting fired because the consultants they hired fucked up. They're still responsible for the business. I think consultants can help more with the "we need to do X, Y, Z" with consultant's report backing it up.
I hear this all the time but it sounds like an urban myth.
I highly doubt someone is not getting fired because the consultants they hired fucked up. They're still responsible for the business. I think consultants can help more with the "we need to do X, Y, Z" with consultant's report backing it up.
> hear this all the time, sounds like an urban myth
I didn’t hear it. I’ve spent years as an L3 (CEO is L1) of one of the largest enterprises in the free world, interacting with other enterprises at that level, and collaborating with all the top consultancies’ teams that work at that level.
My take is while not always the case, the higher level the committee approving the consulting spend (because even that choice/decision is diffused), the more frequently this is involved.
At the end of the day, the CEO works for the Board, who are external and most definitely do not get paid enough to go to jail. Everyone involved needs decision insurance.
I didn’t hear it. I’ve spent years as an L3 (CEO is L1) of one of the largest enterprises in the free world, interacting with other enterprises at that level, and collaborating with all the top consultancies’ teams that work at that level.
My take is while not always the case, the higher level the committee approving the consulting spend (because even that choice/decision is diffused), the more frequently this is involved.
At the end of the day, the CEO works for the Board, who are external and most definitely do not get paid enough to go to jail. Everyone involved needs decision insurance.
I suspect too few people understand this.
The CEO works for the board. The CEO can be fired at will just like any other employee.
They will get an incredibly generous pay-off, unless they have fucked up to a world-beating historic extent. (And sometimes even then.)
But as soon as the CEO loses the confidence of the board, they're on their way out.
And most boards are only really interested in the financials. They don't care about culture, reputation, product range, or any of those other things. That's detail stuff, and it doesn't interest them.
This is a cozy arrangement because no one is personally responsible for anything the company does. The CEO and the board are covered by limited liability, and they won't be going to jail for common crimes - like poisoning water sources, or setting fire to forests.
They may go to jail if they fuck with the financials. Extreme fraud can be a showstopper.
But having a national monopoly on pushing highly addictive drugs isn't. That's a regrettable offence which deserves a medium-ish fine. And - you know - let's say no more about it.
Consultants - like auditors - exist to add another level of deferred responsibility. They're not there to make decisions, they're there to provide legal air cover for decisions that have already been made which need someone else's signature.
The meetings, reports, the hasmter-on-a-wheel super-keen grad cadres and the rest are just theatre.
The CEO works for the board. The CEO can be fired at will just like any other employee.
They will get an incredibly generous pay-off, unless they have fucked up to a world-beating historic extent. (And sometimes even then.)
But as soon as the CEO loses the confidence of the board, they're on their way out.
And most boards are only really interested in the financials. They don't care about culture, reputation, product range, or any of those other things. That's detail stuff, and it doesn't interest them.
This is a cozy arrangement because no one is personally responsible for anything the company does. The CEO and the board are covered by limited liability, and they won't be going to jail for common crimes - like poisoning water sources, or setting fire to forests.
They may go to jail if they fuck with the financials. Extreme fraud can be a showstopper.
But having a national monopoly on pushing highly addictive drugs isn't. That's a regrettable offence which deserves a medium-ish fine. And - you know - let's say no more about it.
Consultants - like auditors - exist to add another level of deferred responsibility. They're not there to make decisions, they're there to provide legal air cover for decisions that have already been made which need someone else's signature.
The meetings, reports, the hasmter-on-a-wheel super-keen grad cadres and the rest are just theatre.
I don't know more than is in this podcast, and n=1, but the leash isn't always very tight:
https://www.npr.org/sections/money/2017/07/19/538141248/epis...
> They weren't idealists or social activists--just two shareholders who thought the CEO was being grossly overpaid. And they figured that salary was paid with money taken out out of their pockets. So they tried to force a pay cut.
https://www.npr.org/sections/money/2017/07/19/538141248/epis...
> They weren't idealists or social activists--just two shareholders who thought the CEO was being grossly overpaid. And they figured that salary was paid with money taken out out of their pockets. So they tried to force a pay cut.
I won't doubt your experience. I'm sure it has happened, but I've been in some pretty high up areas as well.
> My take is while not always the case, the higher level the committee approving the consulting spend (because even that choice/decision is diffused), the more frequently this is involved.
It sounds this has more to do with the clout of the individual than it does "oh well mckinsey said this."
> My take is while not always the case, the higher level the committee approving the consulting spend (because even that choice/decision is diffused), the more frequently this is involved.
It sounds this has more to do with the clout of the individual than it does "oh well mckinsey said this."
It depends on how much political clout they have.
Redirecting blame is a lot easier when you have an external party. More interestingly though is it forces a conversation/decision on a particular problem, since you’ve already spent exorbitant sum of money on the consulting fees.
Redirecting blame is a lot easier when you have an external party. More interestingly though is it forces a conversation/decision on a particular problem, since you’ve already spent exorbitant sum of money on the consulting fees.
> In mega enterprises the CEO matters a lot, but the next 3 or 4 layers often exist primarily to ... diffuse accountability
It took me a while before I understand the political side of how this works. For a while, the biggest question in my head was what the CEO gets out of the whole transaction -- the manager intuitively gets power vis-a-vis proximity, but what does /their/ manager get out of it?
I think this confusion wears off the first time you see a sacrifice in management made. That's when you start being able to see how the value chain which is attached to that confidence default occur. Then it becomes completely rational that decision insurance is priced into both the manager's internal calculus and that of the corporation.
The problem with running a company this way is that "your margin" eventually becomes "my opportunity" and that transition gets especially jerky in a frothy market like the one we have now. Do you really need the layers of middle management there, at all? If someone raised a boatload of cheap capital and rebuilt the high margin bigmoat stuff from scratch, would they out-execute you?
It took me a while before I understand the political side of how this works. For a while, the biggest question in my head was what the CEO gets out of the whole transaction -- the manager intuitively gets power vis-a-vis proximity, but what does /their/ manager get out of it?
I think this confusion wears off the first time you see a sacrifice in management made. That's when you start being able to see how the value chain which is attached to that confidence default occur. Then it becomes completely rational that decision insurance is priced into both the manager's internal calculus and that of the corporation.
The problem with running a company this way is that "your margin" eventually becomes "my opportunity" and that transition gets especially jerky in a frothy market like the one we have now. Do you really need the layers of middle management there, at all? If someone raised a boatload of cheap capital and rebuilt the high margin bigmoat stuff from scratch, would they out-execute you?
It's a lot more than that. It's about further enabling power structures at the client organization while diminishing employee and other "lower classes" negotiation and influence possibilities. In essence, it's a turbo-charged manager service, where you pay a flat fee to someone to represent your interest. The fee is high, but for it you buy more loyalty, a deadline to the relationship and avoid labor disputes, employee rights lawsuits, etc.
"Your interest" as in whoever pays the check. This service is immensely valuable to stakeholders, otherwise they would not continuously pay for it. A career manager at a company will have much more complexity in interests and loyalties as opposed to a consultant hired by a single, at the end of it, actor (whoever controls the signing and payment process).
Let's take a typical employee manager loyalty conundrum, pick one: loyal to the CEO, your boss, the shareholders at large, a specific shareholder group, the board? They often have different interests, and recruit or are looking to recruit agents for them. For the consultant? Whoever pays!
I found the book "Confronting managerialism: How the business elite and their schools threw our lives out of balance" by Locke and Spencer quite useful to understand some of the realities at play (not specifically consulting, but the broader managerial and by application consulting manager roles).
If leaders keep hiring consultants, there is value for them. This does not mean value for the organization. Most certainly, not for society at large, as the parent article can demonstrate.
"Your interest" as in whoever pays the check. This service is immensely valuable to stakeholders, otherwise they would not continuously pay for it. A career manager at a company will have much more complexity in interests and loyalties as opposed to a consultant hired by a single, at the end of it, actor (whoever controls the signing and payment process).
Let's take a typical employee manager loyalty conundrum, pick one: loyal to the CEO, your boss, the shareholders at large, a specific shareholder group, the board? They often have different interests, and recruit or are looking to recruit agents for them. For the consultant? Whoever pays!
I found the book "Confronting managerialism: How the business elite and their schools threw our lives out of balance" by Locke and Spencer quite useful to understand some of the realities at play (not specifically consulting, but the broader managerial and by application consulting manager roles).
If leaders keep hiring consultants, there is value for them. This does not mean value for the organization. Most certainly, not for society at large, as the parent article can demonstrate.
As I read your comment I was thinking “this!” then I saw your book recommendation and chuckled, “Of course!”
What an important book.
Here’s a purchase link (non-affiliate but the URL that donates to your selected cause):
https://smile.amazon.com/Confronting-Managerialism-Business-...
What an important book.
Here’s a purchase link (non-affiliate but the URL that donates to your selected cause):
https://smile.amazon.com/Confronting-Managerialism-Business-...
Pleasantly surprised to meet someone else here that has read it! My management department at a major university has not!
It is somewhat telling that this book mostly gets cited by practitioners of CMS, Critical Management Studies, with a citation index in the hundreds.
Perhaps the explanation lies, as CMS luminary Alvesson puts it, in the basis of mainstream management research seeing itself as in the service of industry.
It is somewhat telling that this book mostly gets cited by practitioners of CMS, Critical Management Studies, with a citation index in the hundreds.
Perhaps the explanation lies, as CMS luminary Alvesson puts it, in the basis of mainstream management research seeing itself as in the service of industry.
I also appreciated this:
https://smile.amazon.com/Managerialism-Critique-Ideology-T-K...
And much more obscure but a wry delight:
https://smile.amazon.com/Have-Fun-at-Work-Livingston/dp/0937...
https://smile.amazon.com/Friends-High-Places-Livingston-1990...
https://smile.amazon.com/Managerialism-Critique-Ideology-T-K...
And much more obscure but a wry delight:
https://smile.amazon.com/Have-Fun-at-Work-Livingston/dp/0937...
https://smile.amazon.com/Friends-High-Places-Livingston-1990...
I heard somewhere that one of the reasons consultants are brought in, even if the business owners know what to do, is to shift the blame to them. As in, its their idea, we are following the experts.
Not sure how right it is.
Not sure how right it is.
This is a bad take on McK. The 26-year old isn’t in charge of projects, the 45-year old McK partner with a few decades of experience is.
Also, McK is more about organizing change and getting buy in. That’s their value. Some Director could come up with a strategy but no one would follow it.
Just like IBM, if a strategy fails, nobody gets fired for having hired McK. There is value in that.
Also, McK is more about organizing change and getting buy in. That’s their value. Some Director could come up with a strategy but no one would follow it.
Just like IBM, if a strategy fails, nobody gets fired for having hired McK. There is value in that.
> Just like IBM, if a strategy fails, nobody gets fired for having hired McK. There is value in that.
This is it right here. A shocking percentage of corporate boardrooms are McKinsey alumni — by hiring McKinsey to develop or even just validate your strategy, you buy credibility from the people who sign the checks because they know and trust senior people at McKinsey.
Consulting is a relationship business. The other purpose of consulting at the boardroom level is to enable companies to sidestep laws around collusion and insider trading — the SEC occasionally charges somebody, but it’s largely symbolic given how pervasive it is. It’s not unheard of for CEOs of companies that are direct competitors to have regular calls to discuss strategy, all while using consultants to create a paper trail that says the strategy was developed through rigorous analysis.
This is it right here. A shocking percentage of corporate boardrooms are McKinsey alumni — by hiring McKinsey to develop or even just validate your strategy, you buy credibility from the people who sign the checks because they know and trust senior people at McKinsey.
Consulting is a relationship business. The other purpose of consulting at the boardroom level is to enable companies to sidestep laws around collusion and insider trading — the SEC occasionally charges somebody, but it’s largely symbolic given how pervasive it is. It’s not unheard of for CEOs of companies that are direct competitors to have regular calls to discuss strategy, all while using consultants to create a paper trail that says the strategy was developed through rigorous analysis.
I'm not from McKinsey, but from BCG Gamma (speaking from my own PoV, of course).
One thing I've learned over time: expensive fees are a feature, not a bug.
People will listen more to what you have to say about any topic if they're paying a few hundred $K for that. And the same goes when you need to deliver a new tool to your client. Being expensive means my IT tickets won't be shelved for a week or two because some guy didn't like my face. It's often the case where a 3 weeks process with a five-people-approval form gets shortened to a single zoom meeting plus an email, and I really like that :). That's the difference between a 8 weeks project being put in production two weeks early and already getting traction because the "business people" are more engaged ; and a 2 years project going nowhere because the team gets shuffled constantly and requirements keeps changing.
PS: It only works if you can deliver what you promised, though
One thing I've learned over time: expensive fees are a feature, not a bug.
People will listen more to what you have to say about any topic if they're paying a few hundred $K for that. And the same goes when you need to deliver a new tool to your client. Being expensive means my IT tickets won't be shelved for a week or two because some guy didn't like my face. It's often the case where a 3 weeks process with a five-people-approval form gets shortened to a single zoom meeting plus an email, and I really like that :). That's the difference between a 8 weeks project being put in production two weeks early and already getting traction because the "business people" are more engaged ; and a 2 years project going nowhere because the team gets shuffled constantly and requirements keeps changing.
PS: It only works if you can deliver what you promised, though
ORLY?
Sauce?
I have worked in Management Consulting, not with MK, but I have worked with MK alumni and in engagements where MK was there before us.
TL;DR: I respect their work, take the price tag away since it's meaningless. Running a business is hard, Management Consulting is also hard. Unbeknown to most people, Consulting companies also - often - execute, and there's something to be said about an outsider doing the heavy lifting, dirty work, and be the garbage person.
If that comes with a fancy label, well.. there's a price for that too.
Amen.
Sauce?
I have worked in Management Consulting, not with MK, but I have worked with MK alumni and in engagements where MK was there before us.
TL;DR: I respect their work, take the price tag away since it's meaningless. Running a business is hard, Management Consulting is also hard. Unbeknown to most people, Consulting companies also - often - execute, and there's something to be said about an outsider doing the heavy lifting, dirty work, and be the garbage person.
If that comes with a fancy label, well.. there's a price for that too.
Amen.
>>Too bad they can't be sued for ruining countless businesses with mindless self-serving "advice" meant to do nothing more than get their contracts re-upped.
A fool and his money...that's their problem TBH. Those that hire them aren't grandmas on Social Security or mom-and-pop stores, they are supposedly super sophisticated businesses.
A fool and his money...that's their problem TBH. Those that hire them aren't grandmas on Social Security or mom-and-pop stores, they are supposedly super sophisticated businesses.
I hope they also fire everyone involved and substract the money directly from each partner compensation. That will maybe teach a lesson to a whole generation.
Okay, naive, wishful thinking.
Okay, naive, wishful thinking.
That is, by the nature of a partnership, how it affects partner compensation.
Not really. This likely will not effect partner comp. It will effect the firm, but partners will spin it as the guilty parties are gone and the leaders need to be retained (through comp!) to right the organization. The low levels will absorb it through lower comp. I've worked in consulting for years and no matter what happens, EVER, partner comp is NEVER effected. They will hem and haw about it, discuss it, maybe make it seem like they are reducing their comp (really just pushing bonuses to more opportune time), but they always get made whole.
Nit:
"Effect" is an Entity, a noun. They both start with "E."
"Affect" is an Action, a verb. They both start with "A."
Effect is sometimes used as a verb, especially in bureaucratese, but not in the way you're using it.
With apologies.
"Effect" is an Entity, a noun. They both start with "E."
"Affect" is an Action, a verb. They both start with "A."
Effect is sometimes used as a verb, especially in bureaucratese, but not in the way you're using it.
With apologies.
Since you went there...
"Affect" can also be a noun, referring to behavioral characteristics :)
"Affect" can also be a noun, referring to behavioral characteristics :)
ha, thank you.
That's not how things work at McKinsey (current employee speaking).
It's a partnership and partners take the hit when there is one to take.
As a recent example (2020), in response to the difficulties stemming from the COVID 19 crisis partners compensation was massively reduced, but no one else's comp at the firm was affected.
As for the consequences of the current opioid-related debacle, it has been communicated to the firm members today that any economical consequence would be borne out of Partner's comp, as is usual.
As for the consequences of the current opioid-related debacle, it has been communicated to the firm members today that any economical consequence would be borne out of Partner's comp, as is usual.
The responsible parties have been terminated
"We said we would have no tolerance for those who violate our professional standards. In this case, after a thorough investigation, two partners have been terminated for violating our Firm’s professional standards.""
Source: https://www.mckinseyopioidfacts.com/wp-content/uploads/2021/...
"We said we would have no tolerance for those who violate our professional standards. In this case, after a thorough investigation, two partners have been terminated for violating our Firm’s professional standards.""
Source: https://www.mckinseyopioidfacts.com/wp-content/uploads/2021/...
McKinsey also implicitly involved in the whole Valeant debacle. These guys love extracting, no extorting, “value” from thin air.
McKinsey or its partners have been directly involved in Enron, Valeant, and now an opioid crisis that's claimed thousands (if not millions of lives).
"In for a penny, in for a pound" - this should be McKinsey's new corporate slogan.
Valeant article: https://www.ft.com/content/0bb37fd2-ef63-11e5-aff5-19b4e2536...
Enron article: https://www.theguardian.com/business/2002/mar/24/enron.theob...
"In for a penny, in for a pound" - this should be McKinsey's new corporate slogan.
Valeant article: https://www.ft.com/content/0bb37fd2-ef63-11e5-aff5-19b4e2536...
Enron article: https://www.theguardian.com/business/2002/mar/24/enron.theob...
McKinsey are involved in almost every company in the Fortune 500, and have been for decades.
Of course they're going to be around for almost any given corporate failure.
Of course they're going to be around for almost any given corporate failure.
Totally agree, this is cherry-picking.
I don't have an opinion on how useful McKinsey is, but I'll note that no one is pointing out that they also did a lot of work for Microsoft before their big turnaround.
I don't have an opinion on how useful McKinsey is, but I'll note that no one is pointing out that they also did a lot of work for Microsoft before their big turnaround.
Enron and Valeant are two of the most significant examples of corporate malfeasance over the past 20 years; McKinsey or its partners were directly involved in both.
That's not cherry-picking.
That's not cherry-picking.
I think they work more than a third of F500 companies. What's your definition of cherry picking?
The absolutely most fascinating part of this is learning how McKinsey has long argued that making recommendations that businesses may or may not act on does not create legal liability (until this).
I’m trying to see that argument applied in any other instance and it becomes totally ridiculous.
“You see, your honor, I merely suggested to my client that he kill his neighbor in order to take his land, I didn’t think he’d actually DO it!”
I’m trying to see that argument applied in any other instance and it becomes totally ridiculous.
“You see, your honor, I merely suggested to my client that he kill his neighbor in order to take his land, I didn’t think he’d actually DO it!”
I think there are times when this disclaimer makes sense. Industry regulation can be quite complicated and nuanced enough that an action might be illegal despite not seeming so on the surface. They also can vary between jurisdiction.
Having an experienced industry lawyer review future business plans is just good sense.
Having an experienced industry lawyer review future business plans is just good sense.
Note that the only other place it works like this law. Lawyers are always "providing advice" about complex legal matters, with no actual responsibility for the outcome (with limited exceptions). So the idea that lawyers would apply similar logic to a reasonably-similar circumstance (in terms of complexity, difficulty, potential liability, etc.) is not unreasonable.
I don't know about the US but lawyers in the UK most definitely have liability for what they recommend - if a lawyer gives me advice that ends up causing me £X because it was legally wrong then I'd have a pretty good case for a claim on their professional indemnity insurance.
Only if you can show negligence
What? Lawyers are absolutely liable. Their only shield is in the most complex realms where the actual legal theory isn't yet tested in court / with a regulator, so you know going in their advice may not pan out, because it's /experimental/.
That's not the vast majority of law, though.
That's not the vast majority of law, though.
Are they actually legally liable in this case or just paying a settlement to get their name out of the press and get away cleanly from the issue?
>>As part of the settlement, McKinsey admits to no wrongdoing.
https://www.npr.org/2021/02/04/963864747/consulting-giant-mc...
That’s incredibly normal. It’s a regularly negotiated term that’s used to shield the wrongdoer from continued civil liability.
Frankly, I think it’s such transparent bullshit that we should abolish it. Really, you admit to no wrong doing but you’re willing to fork over half a billion because ...?
Frankly, I think it’s such transparent bullshit that we should abolish it. Really, you admit to no wrong doing but you’re willing to fork over half a billion because ...?
If you're going to be made to pay out and concede liability, why not simply go to trial and suffer the same legal fate? It's not there as a mere legalese recitation or to shield the defendant's ego. To finish your rhetorical question, the reason you pay out but admit no wrongdoing is in recognition of the risk of financial liability stemming from the litigation.
[deleted]
> why not simply go to trial and suffer the same legal fate?
The same reason most people take a plea bargain. Punitive damages. "Prison for six months, or the risk of a jury sending you to prison for ten years" is a pretty strong incentive to plead guilty.
If the punitive damages can be expected to be 10-20x of what you'd settle for, you'd probably just take the plea.
The same reason most people take a plea bargain. Punitive damages. "Prison for six months, or the risk of a jury sending you to prison for ten years" is a pretty strong incentive to plead guilty.
If the punitive damages can be expected to be 10-20x of what you'd settle for, you'd probably just take the plea.
Yeah, but innocent people have to take pleas all the time because of it.
I want them to go to trial. I think it’s incredibly unseemly that we as a society bring down the hammer on individual drug dealers, but let corporate ones wash the blood off their hands with shareholder money.
Each one of these people deserves a pair of steel bracelets and their day in court in front of a jury of their peers.
Each one of these people deserves a pair of steel bracelets and their day in court in front of a jury of their peers.
I think McKenzie would be found innocent in a court of law. This is a settlement because they don’t want to be dragged through the mud in PR. They provided advice, the company chose to act on it. Unless their Advice Misslead regarding the legal risk, they are in the clear. If it was misleading, the damages would be to Purdue.
I’m no lawyer, but providing advice to a client who then goes ahead and breaks the law with said advice sure sounds like it meets the federal charge of conspiracy.
That really depends on the the advice is.
I don't see a big problem with "This would make you a bunch of money, but you should have your lawyers look at it" or "this will make you a bunch of money, but has a high legal risk".
If the advice is: "this is illegal, and here is how to avoid getting caught" then I could see that being a crime.
If the advice is: "this is illegal, and here is how to avoid getting caught" then I could see that being a crime.
You are adding requirements and escape clauses to the federal charge of conspiracy that are not actually in the law. Here is the relevant text of 18 U.S. Code § 371:
> If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.
The question, fundamentally, is whether or not what McKinsey did counts as to "effect the object of the conspiracy". If yes, there is no magic "go talk to your lawyer" phrase to escape criminal liability, for the same reason why you can't bring a lawyer with you and depend on attorney client confidentiality to protect you from search warrants and prosecution.
> If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.
The question, fundamentally, is whether or not what McKinsey did counts as to "effect the object of the conspiracy". If yes, there is no magic "go talk to your lawyer" phrase to escape criminal liability, for the same reason why you can't bring a lawyer with you and depend on attorney client confidentiality to protect you from search warrants and prosecution.
Yeah, I agree with you. You would have to show intent to do something criminal at the core of it. I’m not sure that’s there for McKenzie.
If the law intended for there to be an intent requirement, then the statute itself would say “knowingly” or “willfully”, which it clearly does not. This means that one can accidentally commit conspiracy, so long as the law you’re conspiring to break does not have an intent requirement.
I think we might have to agree to disagree. My understanding is that the conspiracy must intend to break the law. If one party doesn’t know the other is breaking the law, it isn’t conspiracy. If McKenzie didn’t have any illegal recommendations, or knowledge of illegal actions, they are in the clear.
If they advised Perdue to do something illegal, that is a different story
If they advised Perdue to do something illegal, that is a different story
That's a pretty standard part of settlements, and very nearly semantically void.
The more salient facts for someone who's looking to this as an instructive story are: they advised a company to do some things that had some pretty hefty consequences, those consequences came back to bite them, and it cost them $573M plus legal fees and damaged reputation.
$573M is $573M, regardless of whether a court orders you to pay it, or whether it's the amount you're paying to avoid having to find out how much the court would order you to pay. The fact that no ruling went onto the books is small consolation.
The more salient facts for someone who's looking to this as an instructive story are: they advised a company to do some things that had some pretty hefty consequences, those consequences came back to bite them, and it cost them $573M plus legal fees and damaged reputation.
$573M is $573M, regardless of whether a court orders you to pay it, or whether it's the amount you're paying to avoid having to find out how much the court would order you to pay. The fact that no ruling went onto the books is small consolation.
That if anybody sues you for the same thing you've already been investigated and fined for, they had better have enough money to relitigate the entire thing is more than a small consolation, it's a public subsidy.
We should do away with settling out of court without a statement of who is at fault. The court could reject the settlement if the core issue of the case is not addressed.
By way of analogy this is why it’s a needed change. Applying settlements to criminal law I could murder you, and settle the case for some dollar amount and not have to admit guilt.
In short settling out of court is a way for the wealthy to avoid meaningful penalties.
By way of analogy this is why it’s a needed change. Applying settlements to criminal law I could murder you, and settle the case for some dollar amount and not have to admit guilt.
In short settling out of court is a way for the wealthy to avoid meaningful penalties.
I don’t think it was a criminal case but a civil one. The plaintiff can drop it if they want.
Yeah, if "simply carrying out orders" is not an appropriate defence then "simply given advice on orders" isn't either. Both are caught in the gravitational field of the guilt of the person in the middle.
One would have thought that at least one person on their in-house counsel team would have heard the term "civil conspiracy" before.
This case aside, isn't that a well accepted legal doctrine? Encouraging someone to do something is rarely a crime. Incitement to riot is the only exception I can think of.
It's funny reading comment here saying how "Consulting is useless BS" whilst also condemning them for "turbocharging Opioid sales"
You don't need to do much to be wrong, especially in the context of selling highly addictive drugs.
That's not the point; you can't say their advice is ineffective, while also condemning them for being effective.
The top comment derisively states:
"The whole business is a scam built around sending in some 26 year-old with an Ivy League degree and $100 haircut to regurgitate snippets from articles in HBR"
In the context of fining the company $500MM for being too effective.
At least in the US, where the punishment is relative to the crime; the court clearly agrees about their efficacy.
The top comment derisively states:
"The whole business is a scam built around sending in some 26 year-old with an Ivy League degree and $100 haircut to regurgitate snippets from articles in HBR"
In the context of fining the company $500MM for being too effective.
At least in the US, where the punishment is relative to the crime; the court clearly agrees about their efficacy.
You don't need groundbreaking innovation in sales from your consultants to keep selling too much opioids, a product that mostly sells itself. Better consultants should probably try to stop you, however.
I'm not sure there is that much dissonance. In the opioid case, they gave effective advice, but it wasn't necessarily of very high quality - the reason you wouldn't do what McKinsey suggests isn't because you didn't think of it but because you would find immoral and illegal.
The reason McKinsey was being sued isn't because they were giving effective advice, but because it was likely illegal.
Because of this I'd understand that both can be the case. That said, I'm not sure McKinsey is always as ineffective as the top comment suggests.
The reason McKinsey was being sued isn't because they were giving effective advice, but because it was likely illegal.
Because of this I'd understand that both can be the case. That said, I'm not sure McKinsey is always as ineffective as the top comment suggests.
Their advice was highly effective in bringing the company to bankruptcy, if that's the metric you were aiming for. Aside from destruction of private and public equity.
To play devil's advocate, they could be both ineffective and harmful. Just because they succeeded in getting the company to do something, that not mean it was the right thing. The sale of the drugs could have produced a net loss as well as harmed the people who bought them.
Ineffective = “having no effect”
Harmful = “having a negative effect”
How can they be both?
Harmful = “having a negative effect”
How can they be both?
You can be effective at selling opiates to people, but then end up in an investigation for selling them illegally and thus neutralising any of the revenue you had initially brought with fines for doing so illegally. Here's no effect.
Of course a lot of brutal strategies work well in environments which do not expect them. However trusted environments are often more efficient.
Of course a lot of brutal strategies work well in environments which do not expect them. However trusted environments are often more efficient.
With a comma? Ineffective doesn't mean no-effect, it means 'not the intended effect'.
I.E. "McKinsey worked with Purdue to implement an ineffective business strategy that resulted in bankruptcy for the business, due the harmful nature of the product and the predatory nature of the strategy."
I.E. "McKinsey worked with Purdue to implement an ineffective business strategy that resulted in bankruptcy for the business, due the harmful nature of the product and the predatory nature of the strategy."
Sure, but I would think generating significant amounts of revenue would tilt the probabilities towards "consultants do actually do something".
There is a less contradictory note of "Consulting is useless BS" and "Shame on them for taking dirty money".
A $500MM fine is a bit beyond "shame on you for taking dirty money".
I doubt any marketing firms working for Purdue was fined $500MM despite contributing to the same outcome. And that's because they didn't have the same impact.
The justice system metes out punishment relative to one's contribution to the crime.
I doubt any marketing firms working for Purdue was fined $500MM despite contributing to the same outcome. And that's because they didn't have the same impact.
The justice system metes out punishment relative to one's contribution to the crime.
The fine seems related to the amount of damning quotes that came from McKinsey produced materials. They left a bigger paper trail than anyone else.
Like this sort of thing:
"One was to give distributors a rebate for every OxyContin overdose attributable to pills they sold. The slides are notable for their granular detail.
For example, McKinsey estimated that 2,484 CVS customers would overdose or develop an opioid use disorder in 2019 from taking OxyContin. CVS said the plan was never implemented."
Not implemented, so didn't end up being effective. But damn.
Like this sort of thing:
"One was to give distributors a rebate for every OxyContin overdose attributable to pills they sold. The slides are notable for their granular detail.
For example, McKinsey estimated that 2,484 CVS customers would overdose or develop an opioid use disorder in 2019 from taking OxyContin. CVS said the plan was never implemented."
Not implemented, so didn't end up being effective. But damn.
That's not how justice works; damning quotes determine guilt; not the magnitude of guilt.
It was a negotiated settlement, there weren't any pre-set rules on how the amount was agreed upon.
Except there is, a negotiation is based on the next best alternative; which is the legal system.
Mcks wouldn’t have settled for that much if they thought they’d fare better in court.
Mcks wouldn’t have settled for that much if they thought they’d fare better in court.
They didn't want it in court because it would have made a documented legal precedent around liability.
"One former partner called the settlement hugely significant because it shatters the distance that McKinsey — which argues that it only makes recommendations — puts between its advice and its clients’ actions. For decades, the firm has avoided legal liability for high-profile failures of some clients, including the energy company Enron and Swissair, Switzerland’s defunct national airline."
https://www.nytimes.com/2021/02/03/business/mckinsey-opioids...
"One former partner called the settlement hugely significant because it shatters the distance that McKinsey — which argues that it only makes recommendations — puts between its advice and its clients’ actions. For decades, the firm has avoided legal liability for high-profile failures of some clients, including the energy company Enron and Swissair, Switzerland’s defunct national airline."
https://www.nytimes.com/2021/02/03/business/mckinsey-opioids...
1. I think that’s making a guess into their intentions which we’re not qualified to do
2. Even if we take #1 for granted, the $500MM figure is still based on something. The counter-party could’ve settled for $100MM or insisted on $1B but they reached that number for a reason.
2. Even if we take #1 for granted, the $500MM figure is still based on something. The counter-party could’ve settled for $100MM or insisted on $1B but they reached that number for a reason.
The story doesn't end there though, does it? The recommendations _did_ result in massive public backlash, hefty fines and a whole load of other shit for both McKinsey and their client. I wonder if these companies think this route was worth it.
Personally I don't know too much about this case. But courts can find corporations liable, even if they did a terrible job. It's the same logic as putting the getaway driver in jail for attempted robbery, even if they dropped the clutch and stalled the car. McKinsey could have done a terrible job but also been liable according to courts (who probably just assume white-shoe consultants did a good job anyway).
There’s a difference between a criminal and civil case.
Crimes are boolean, civil is proportional in terms of punishment. Nobody is going to jail, so this is a civil case.
If you break your neighbour’s car, you pay more if it’s a BMW than if it were a Kia.
Crimes are boolean, civil is proportional in terms of punishment. Nobody is going to jail, so this is a civil case.
If you break your neighbour’s car, you pay more if it’s a BMW than if it were a Kia.
Crimes are proportional in terms of punishment. It's called aggravating and mitigating factors.
Interesting that you think the two are mutually exclusive. Personally, I'd consider consulting advice to systematically hook an entire country onto opioids to be "useless BS" much in the same way I'd consider schemes to fix bread prices as "useless BS". Both are cases of rather obvious approaches that are not only legally and ethically bankrupt, but more importantly fundamentally unsound and unsustainable as growth strategies.
Mcks wasn’t asked for advice on ethics, they were asked advice on increasing sales.
If you go to a Tattoo artist and ask for a portrait tattooed on your face, it might be gauche as hell, but that didn’t change the fact the artist might’ve done a great job.
If you go to a Tattoo artist and ask for a portrait tattooed on your face, it might be gauche as hell, but that didn’t change the fact the artist might’ve done a great job.
Not even close to a comparable analogy. A better analogy would be yours, but where the ink disappears after 1 day and the person getting the tattoo dies a day later.
No, it’s a perfect analogy, because it illustrates that efficacy is independent of moral perspective.
Morality has nothing to do with it. If consulting advice literally bankrupts your company, the advice is trash, full stop.
No, the advice Purdue asked for bankrupted the company.
Just like how asking a programmer to build a garbage program doesn’t mean the programmer is trash, it just means the specs are.
Just like how asking a programmer to build a garbage program doesn’t mean the programmer is trash, it just means the specs are.
Slinging dope isn't exactly rocket science.
Would you describe a parasite that kills its host as efficient?
[deleted]
It's interesting because McK is a club, not a company. They are a relatively disparate group of people operating on the basis of culture, it's not top down.
Some partners can go way off the reservation compared to others, and they may have little to do with one another.
Some partners can go way off the reservation compared to others, and they may have little to do with one another.
Less than 5% of their revenue. I'm sure they learned their lesson.
Almost as if crime does pay.
Maybe ethics and morals should be mandatory trainings?
Ethics and morals get in the way of increasing shareholder value.
I am unconvinced that any mandatory training is useful (ignoring the fact that the act of implementing the training itself is useful to the people who implement the training.)
I think "training" is a misnomer, as its not actually the case the people doing shady stuff will change their moral compass based off of clicking through a few slides.
However, if the "training" includes explaining how employees breaking these rules will be held accountable and how it will affect their continued employment, it could influence behavior of potential bad actors.
However, if the "training" includes explaining how employees breaking these rules will be held accountable and how it will affect their continued employment, it could influence behavior of potential bad actors.
The only training in the end is that everything is for sale if the price is high enough.
A slap on the hand.
The war on drugs is responsible for the opioid crisis.
Companies psychopathically seek out profits, and need to be kept in check, but that does not diminish the fact that US (and Canadian) drug policy bears direct responsibility for opioid deaths.
This kind of news story, while maybe satisfying, is a red herring. As long as addiction is criminalized, and legal drug supplies dont exist, it doesn't matter how many Purdues or McKinseys we punish, the problem does not go away.
Companies psychopathically seek out profits, and need to be kept in check, but that does not diminish the fact that US (and Canadian) drug policy bears direct responsibility for opioid deaths.
This kind of news story, while maybe satisfying, is a red herring. As long as addiction is criminalized, and legal drug supplies dont exist, it doesn't matter how many Purdues or McKinseys we punish, the problem does not go away.
Why do you see it as mutually exclusive? I don’t think it’s really an either/or situation. It’s both.
You know in cop shows like "the wire" when the police commissioner says he wants to see "drugs on the table" showing off what they seized from the gangs, but the detectives know it's a hollow victory that just panders to public opinion but does nothing to address the root of the problem? This is like that.
You don't have to choose one or the other. Even if the war on drugs got ended these companies find other unethical ways to make money.
The opioid epidemic was started by over prescription of legal opioids. The war on drugs is an inhumane disaster. But the opioid issue is on the US health system.
No. Addicts (after being tricked into addiction by the Sacklers and McKinseys of the world) without the war on drugs could continue to consume legal, clean opiates, which would fail to lead to fent overdoses, and fail to push users into grinding poverty and crime. Being a opiate addict would be like being an asthmatic, just without the high mortality rate that asthma brings.
The opioid crisis would have happened without the war on drugs. The fundamental driver of it is Oxycontin's dosing schedule, which was optimized for causing addiction. Marketing for Oxycontin is all about how it "lasts twelve hours", when it often doesn't. Doctors were trained and pressured to increase the prescribed dose when patients complained of pain in the hours before their next scheduled dose, rather than switching to something like an every-eight-hours schedule.
The end result is a medication profile with a pronounced sawtooth pattern. On a daily basis, patients get relief from pain, suffer waiting for their next dose through a few hours of agony, and then get relief again. If they try to fix this problem and complain of untreated pain, the doctor ups their dosage and makes the sawtooth even worse.
What the war on drugs does is add inflexibility and a criminal dimension to the newly-minted opioid addict's interaction with society. Run out because you accelerated your dosing schedule in order to avoid hours of daily agony? You're not allowed to refill early for any reason whatsoever, and it may get you a drug-seeking label that kicks you out of the official reason entirely.
The end result is a medication profile with a pronounced sawtooth pattern. On a daily basis, patients get relief from pain, suffer waiting for their next dose through a few hours of agony, and then get relief again. If they try to fix this problem and complain of untreated pain, the doctor ups their dosage and makes the sawtooth even worse.
What the war on drugs does is add inflexibility and a criminal dimension to the newly-minted opioid addict's interaction with society. Run out because you accelerated your dosing schedule in order to avoid hours of daily agony? You're not allowed to refill early for any reason whatsoever, and it may get you a drug-seeking label that kicks you out of the official reason entirely.
That undersells their liability and (i think) evil behavior.
The original Dr. Sackler invented modern marketing of drugs directly to consumers, starting with getting millions addicted to Valium - which BTW was totally gross sexism. the very Mad Men 60s style marketing /r/oldschool ridiculous keeping women in the house and dealing with their 'emotions and feelings' with downers etc.
The Netflix doc the Pharmacist is really good I highly recommend. Purdue gave direct $ bonus' to their sales people, using prescriber data to knowingly target Drs. prescribing insane amounts of opiates. On purpose because they identified it as the most profitable.
They also basically bribed doctors to attend conferences and put their name on BS 'research.' they spent millions to induce an earth shaking change in pain management - opiates weren't widely used long term before their 'investment.'
Plus the first baseline research they use to justify this was total overstated from one Drs opinion.
It's also the pharmacies, Walmart optimized profits and kept pharmacists from questioning scripts.
And now last I checked the Sacklers still have their billions and are using the same playbook with a new company in the developing world/India.
I'm also totally against the war on drugs and believe we need to fundamentally change attitudes and pretty much remove possession laws.
Personally I would go so far as to provide free prescriptions/handouts for addicts of opiates/stims that are pure, clear doses, and safer to inject or use. Make it mandatory to interact with mental health professionals to get the drugs and offer free treatment (medication focused) when the user is ready themselves to attempt to get clean.
It's also gross that it's a good amount harder for a doctor to prescribe suboxone than it is opiates.
https://www.theguardian.com/world/2019/aug/27/india-opioids-...
The original Dr. Sackler invented modern marketing of drugs directly to consumers, starting with getting millions addicted to Valium - which BTW was totally gross sexism. the very Mad Men 60s style marketing /r/oldschool ridiculous keeping women in the house and dealing with their 'emotions and feelings' with downers etc.
The Netflix doc the Pharmacist is really good I highly recommend. Purdue gave direct $ bonus' to their sales people, using prescriber data to knowingly target Drs. prescribing insane amounts of opiates. On purpose because they identified it as the most profitable.
They also basically bribed doctors to attend conferences and put their name on BS 'research.' they spent millions to induce an earth shaking change in pain management - opiates weren't widely used long term before their 'investment.'
Plus the first baseline research they use to justify this was total overstated from one Drs opinion.
It's also the pharmacies, Walmart optimized profits and kept pharmacists from questioning scripts.
And now last I checked the Sacklers still have their billions and are using the same playbook with a new company in the developing world/India.
I'm also totally against the war on drugs and believe we need to fundamentally change attitudes and pretty much remove possession laws.
Personally I would go so far as to provide free prescriptions/handouts for addicts of opiates/stims that are pure, clear doses, and safer to inject or use. Make it mandatory to interact with mental health professionals to get the drugs and offer free treatment (medication focused) when the user is ready themselves to attempt to get clean.
It's also gross that it's a good amount harder for a doctor to prescribe suboxone than it is opiates.
https://www.theguardian.com/world/2019/aug/27/india-opioids-...
> On a daily basis, patients get relief from pain
In fact they get a dosage in excess of what they need for relief from pain. So, on a daily basis, they are just straight up getting high on opiates, and then withdrawing.
In fact they get a dosage in excess of what they need for relief from pain. So, on a daily basis, they are just straight up getting high on opiates, and then withdrawing.
I would say the FDA who approved the use of these drugs, and the doctors who set up businesses specifically to give bogus prescriptions to abusers are the most culpable in all of this. The people who end up paying these big settlements are targeted because they have the most money, not because they're the most culpable. The big evil company narrative is also a fantastic way to distract from the fact that regulatory failure caused a decades long epidemic of opioid deaths. "We investigated ourselves and found McKinsey were to blame".
The same people working in the industry are regulating the industry. It's not a scapegoating of McKinsey, it's the giving of a small fine to an abstract entity that can easily absorb it while every actual person involved got rich, including at McKinsey.
since we are addressing the root cause in this sub-thread, i submit that we need to go one layer deeper than just the 'war on drugs'
what causes individuals to seek drugs or other harmful substances? Surely,similar substances existed throughout history? (maybe not as lethal, but still...)
I think it is the despair and lack of spiritual fulfillment for a person, and i think this coincides with what has been a failure in religions to make a relevant impact in individuals lives.
they have often made the situation worse by being judgemental further pushing said individual into this trap.
what causes individuals to seek drugs or other harmful substances? Surely,similar substances existed throughout history? (maybe not as lethal, but still...)
I think it is the despair and lack of spiritual fulfillment for a person, and i think this coincides with what has been a failure in religions to make a relevant impact in individuals lives.
they have often made the situation worse by being judgemental further pushing said individual into this trap.
I think drug prohibition is the lower-hanging fruit here, but it's certainly important not to overlook the deeper causes. Spiritual malaise, a feeling of disenfranchisement and lack of buy-in to society, poverty, and desperation are all tightly intertwined root causes for so many big problems we face today.
Well, I agree, a lot about modern society contributes to the kind of mental health problems that can lead to substance abuse.
But for better or worse, overall health outcomes are better than at any time in history.
So if you're thinking that people being idle, bored, robbed of any agency, and unfulfilled is a root cause of drug abuse, I agree.
But that boils down to being at the top of the needs hierarchy, and moving down has a set of bigger problems with it.
So as long as we're here, treating opioid use as a disease or chronic condition, instead of as some kind of "criminal" hedonistic behavior we should be punished for, goes a long way to reduce any harm it causes.
But for better or worse, overall health outcomes are better than at any time in history.
So if you're thinking that people being idle, bored, robbed of any agency, and unfulfilled is a root cause of drug abuse, I agree.
But that boils down to being at the top of the needs hierarchy, and moving down has a set of bigger problems with it.
So as long as we're here, treating opioid use as a disease or chronic condition, instead of as some kind of "criminal" hedonistic behavior we should be punished for, goes a long way to reduce any harm it causes.
>But for better or worse, overall health outcomes are better than at any time in history.
This is not true? US life expectancy is actually falling now, and due to the obesity epidemic the "average" adult is fairly unhealthy.
This is not true? US life expectancy is actually falling now, and due to the obesity epidemic the "average" adult is fairly unhealthy.
Falling life expectancy is a statistical fiction due to changing demographics. And health/medical outcomes are still better, most of the problem is systems that encourage people to die because they can’t afford care.
When company management wants to make a big change they hire consultants to provide cover and justification for it. The consultants role is to agree to and implement whatever the management's desired change is. The consultants exist to provide an air of authority behind the decision and to act as a smokescreen to the employees facing the change. If the plan succeeds, upper management takes the credit. If it fails, the burden can be shifted onto the consultants.
Companies like McKinsey will say whatever you want them to say, and there is no shortage of conflicting case studies to 'prove' their points.
Companies like McKinsey will say whatever you want them to say, and there is no shortage of conflicting case studies to 'prove' their points.
Aside: When this occurs, how do the C-suite look at themselves and think that they are the ones in charge? You'd think that they'd just have the ability to do it regardless, but an expensive whipping boy (almost literally) is the better fit. How political is your org such that this even becomes a possibility to contemplate? What terrible lack of communication and respect between layers causes this? (These questions are rhetorical, of course)
Imagine you're a VP, or even a C-Suite Executive...
Your employees get to make decisions based on what they think is best, what feels right. You don't have that luxury. Investors, the board, other managers who are vying for your position all demand numbers-based decision making and justification. So what do you do? You hire a well known consultancy to produce documents and data that supports your position. You can now justify your actions by pointing to what they've made for you. And, you have the added bonus of the sunken cost fallacy. "Well of course we took their advice, don't you know how much we paid for it?"
Your employees get to make decisions based on what they think is best, what feels right. You don't have that luxury. Investors, the board, other managers who are vying for your position all demand numbers-based decision making and justification. So what do you do? You hire a well known consultancy to produce documents and data that supports your position. You can now justify your actions by pointing to what they've made for you. And, you have the added bonus of the sunken cost fallacy. "Well of course we took their advice, don't you know how much we paid for it?"
So the VP's job is to be disingenuous to everyone except the consultants? He's already made up his mind about what to do, knows he can't get buy-in from employees, so he hires an external firm to generate the data he has already decided is correct.
I feel like all the comments talking about a breakdown of trust seem even more poignant now after reading your comment.
I feel like all the comments talking about a breakdown of trust seem even more poignant now after reading your comment.
Sometime (often in my limited experience) they do the same in order NOT to change. My employer before last Brough consultants in to see how they could improve. Employees listed the same things as we're listed 3 years previous when the same exercise came in. No action was taken, just lots of considering and discussions.
> When company management wants to make a big change they hire consultants to provide cover and justification for it. [..] Companies like McKinsey will say whatever you want them to say, and there is no shortage of conflicting case studies to 'prove' their points.
Not really, there are plenty of cheaper companies you can hire to do this when you know the solution and just need to bring in someone to do something unpopular - McKinsey is expensive!
In my experience there are 4 key types of job. I've put my own percentages for what I have experienced, but different people in different companies will obviously vary dramatically.
* Problems where the client genuinely doesn't know the right solution, and wants you to help (30%-40%)
* Problems where the client knows a kind of half-baked solution, or has a load of ideas, and wants you to make a fully-baked solution (30%-40%)
* Problems where the client knows the solution, and you are assisting in implementation/further work because the client doesn't have resource or time to do it, or wants someone with specific skills that they don't have internally, for example procurement support, negotiating a merger/acquisition, time sensitive projects e.t.c. (20%)
* Problems where the client knows the solution, and just wants you to tell it to them in a report because that gives it authority or the consultants can take the blame (less than 10%)
Not really, there are plenty of cheaper companies you can hire to do this when you know the solution and just need to bring in someone to do something unpopular - McKinsey is expensive!
In my experience there are 4 key types of job. I've put my own percentages for what I have experienced, but different people in different companies will obviously vary dramatically.
* Problems where the client genuinely doesn't know the right solution, and wants you to help (30%-40%)
* Problems where the client knows a kind of half-baked solution, or has a load of ideas, and wants you to make a fully-baked solution (30%-40%)
* Problems where the client knows the solution, and you are assisting in implementation/further work because the client doesn't have resource or time to do it, or wants someone with specific skills that they don't have internally, for example procurement support, negotiating a merger/acquisition, time sensitive projects e.t.c. (20%)
* Problems where the client knows the solution, and just wants you to tell it to them in a report because that gives it authority or the consultants can take the blame (less than 10%)
> there are plenty of cheaper companies you can hire to do this
Isn't McKinsey like the IBM of their field, though? Hiring someone cheap makes it harder to pass the buck if it doesn't work out. "Nobody ever got fired for buying McKinsey" and all that.
Isn't McKinsey like the IBM of their field, though? Hiring someone cheap makes it harder to pass the buck if it doesn't work out. "Nobody ever got fired for buying McKinsey" and all that.
I mean the pass the buck projects definitely exist, but they aren't as common as you might think in my experience. They can hire McKinsey for them if you want, it's just an expensive way to go. These projects are invariably ordered by companies that have toxic cultures anyway.
Far more common is a project where the client half knows what they want, but their thinking isn't detailed enough to implement it.
As an example that might happen in my field, let's say a company has three distribution centres, each with a general manager, and they report directly into a 'head of logistics'. The project is that they want to look at closing one distribution centre, they think they could probably get away with 2.
The client might know what they want, but probably wont understand the impact on transport costs, the capacity that exists at the other two distribution centres, likely delapse costs, how much they are likely to get for sublease as they have a long lease, the cost of redundancy, system changes required because some specific activity happens in the central DC, impact on the cost of goods sold, what are the inventory benefits, when according to their financial plan will they need the 3rd facility again. They are also unlikely to have an implementation plan and a cost estimate for making the change.
Even if the Head of Logistics can do all that, he has a full time job managing the network and working out all the impacts isn't a part-time job. It's also important to get right, so can be hard to delegate because the company probably doesn't have someone that has worked all this out before (e.g. do they know how to calculate inventory savings?).
So that's how a company can kind of know what they want to do, but consultants can still add value.
Far more common is a project where the client half knows what they want, but their thinking isn't detailed enough to implement it.
As an example that might happen in my field, let's say a company has three distribution centres, each with a general manager, and they report directly into a 'head of logistics'. The project is that they want to look at closing one distribution centre, they think they could probably get away with 2.
The client might know what they want, but probably wont understand the impact on transport costs, the capacity that exists at the other two distribution centres, likely delapse costs, how much they are likely to get for sublease as they have a long lease, the cost of redundancy, system changes required because some specific activity happens in the central DC, impact on the cost of goods sold, what are the inventory benefits, when according to their financial plan will they need the 3rd facility again. They are also unlikely to have an implementation plan and a cost estimate for making the change.
Even if the Head of Logistics can do all that, he has a full time job managing the network and working out all the impacts isn't a part-time job. It's also important to get right, so can be hard to delegate because the company probably doesn't have someone that has worked all this out before (e.g. do they know how to calculate inventory savings?).
So that's how a company can kind of know what they want to do, but consultants can still add value.
A mere licensing fee.
The opinions on consultants in the thread is largely negative and it's suggested hiring them is a sign of organisational dysfunction. If you can find information on consulting spend in annual reports you could create a "consultant factor" for stocks and see if big spenders underperform.
There’s a level of dysfunction that causes a company to acknowledge the issue and hire consultants. And then there’s a level of dysfunction that causes the company to not acknowledge the issue and not hire consultants. The latter level is higher
That relies on the premise that stock performance is somehow correlated with health or overall performance of a company. I think we have recently seen plenty of evidence that the correlation is likely only weak (and I'm not just talking about GME).
It's really tiring to constantly hear how people or organizations with deep pockets can "settle" things by handing over money. Nothing will ever change until either some high level people go to jail or the company goes to jail (as in suspending its business for a while). Or make the fines outrageously high so it really hurts the company and not just as a small part of their profits.
I'm a little more hopeful. They've never been punished like this before for their work. In the future, they'll probably be more careful about who they work with and what they recommend. Not to mention, Purdue Pharma is already taking on the lion share of the blame for these deaths, and paid a $8b settlement and also turned into a public beneficiary company.
"get an audience for our patent infringement suits so that we are feared as a tiger with claws, teeth and balls, and build some excitement with prescribers that OxyContin Tablets is the way to go." (CEO of Purdue, 1996)
There will be another Purdue, except 10x worse, if we don't abolish the http://uspto.gov/.
There will be another Purdue, except 10x worse, if we don't abolish the http://uspto.gov/.
How your classmate became a con artist:
"It’s a choice that’s laden with power. Unlike a bank or a traditional business, consultancies have little capital apart from the graduates they hire. A consultancy is a machine for prestige, and you are the source of their prestige, the smoke that obscures the truth of a business that subsists on the crudity of cutting and selling. They purchased your transcript, and they purchased your diploma, but you have the power to take them away. Without you, a firm has no more weight than the shells through which it is paid.
So withhold your labor, withhold your prestige, and watch as the façade begins tumbling down."
https://stanfordsphere.com/2020/01/30/how-your-classmate-bec...
"It’s a choice that’s laden with power. Unlike a bank or a traditional business, consultancies have little capital apart from the graduates they hire. A consultancy is a machine for prestige, and you are the source of their prestige, the smoke that obscures the truth of a business that subsists on the crudity of cutting and selling. They purchased your transcript, and they purchased your diploma, but you have the power to take them away. Without you, a firm has no more weight than the shells through which it is paid.
So withhold your labor, withhold your prestige, and watch as the façade begins tumbling down."
https://stanfordsphere.com/2020/01/30/how-your-classmate-bec...
$573M will be minimally felt at the organization level.
It is less than 5% of global revenues.
5% of total revenue is a MASSIVE charge. Most companies in the world have profit margins lower than that. They will absolutely feel that in their financial statements.
This is not a retail merchant. This is a big five consultancy. I can assure you their margins are well above 30%.
Approaching this from a cold math perspective, like a McK consultant would.. $573M settlement for approx 450k deaths, is a a little over $1200 per death if that is given away as compensation at all.
Not bad for McK I'd say. The consultants really managed this well.
Not bad for McK I'd say. The consultants really managed this well.
From the New York Times article, "The amount McKinsey is paying is substantially more than it earned from opioid-related work with Purdue or Johnson & Johnson, Endo International and Mallinckrodt Pharmaceuticals, its other opioid-maker clients, a person involved in the settlement negotiations said"
https://www.nytimes.com/2021/02/03/business/mckinsey-opioids...
https://www.nytimes.com/2021/02/03/business/mckinsey-opioids...
Yeah, but liquidated damages can far exceed the cost of the project. In most CapEx you can see clauses that include 3-10X the cost of the project in potential liquidated damages if your robot goes down and damages things, or causes the line to go down. I have no idea how this is handled from the Service side but i imagine it's similiar. IANAL.
And if I killed someone to get their wallet no one suggests that because I didn't get much out of the wallet it's OK for met to have a lenient sentence ?
If McKinsey knowingly offered advice that led to thousand of deaths then the penalty should be more than $1200/body regardless of what their fees were.
If McKinsey knowingly offered advice that led to thousand of deaths then the penalty should be more than $1200/body regardless of what their fees were.
What do you think an appropriate penalty is? When I first read this headline I was worried the fine would be just a slap on the wrist. I was glad to see it was more substantial.
Personally, I think a fine like this is just if it causes consulting firms to think about the consequences of their actions and do the right thing in the future. Making firms responsible for damages they cause would be best. Making it it clearly unprofitable is a good step.
Personally, I think a fine like this is just if it causes consulting firms to think about the consequences of their actions and do the right thing in the future. Making firms responsible for damages they cause would be best. Making it it clearly unprofitable is a good step.
For basic fraud/bad behavior, off the top of my head, at least 5-6x what they made from it might be good. Anything involving direct, long term physical harm (such as death) needs a secondary penalty on top of this unrelated to profits made.
You have to account for not all of these schemes being uncovered. Then you have to add an actual penalty on top of it.
You have to account for not all of these schemes being uncovered. Then you have to add an actual penalty on top of it.
Generally, for just plain old fraud or similar, this gets close to it for me. In this particular case however, where the wrong doing resulted in many deaths I think some other approach is appropriate.
I would really like to see more argument over why jail time is not an appropriate response for senior leaders within organisations that currently suffer nothing more than a fine. Where an organisation has shareholders if the fine is really big then the persons perceived as responsible will, presumably/hopefully, see their career prospects suffer but really to provide an incentive where the benefits can be supremely high I think seeing a few of your peers spending time in jug would help. I appreciate the problem is knowing who to jail and I appreciate that's a hard problem and I don't have a ready answer for it.
I would really like to see more argument over why jail time is not an appropriate response for senior leaders within organisations that currently suffer nothing more than a fine. Where an organisation has shareholders if the fine is really big then the persons perceived as responsible will, presumably/hopefully, see their career prospects suffer but really to provide an incentive where the benefits can be supremely high I think seeing a few of your peers spending time in jug would help. I appreciate the problem is knowing who to jail and I appreciate that's a hard problem and I don't have a ready answer for it.
This is closer to 600x what they would have made on a study like this.
Oh no, they didn't break even.
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Your assumption is that without McK’s involvement nobody would have died of opioid overdoses during that window. That seems very questionable.
I am not defending what the firm did but we are talking about a study that took place in 2017, it has nothing to do with what happened before and certainly doesn't account for all deaths after 2017 either.
Through all of this, no one has received any jail time. That's the biggest crime.
There are people here who say that the consultants are too expensive and are often needed by decision makers to tick a box. But many forget how this demand is created. In a startup, things have to happen fast, some technical debt is unavoidable or the lesser evil. So everything is carrying on, people are hired, many management layers are integrated with what I would call human resources debt( managers covers their own, the top level does not know what is happening at the bottom) and suddenly, the demand for an external consultant is created. This is the price you pay for the fast growth and overlooking the little obstacles. Now the top level management will send a corporate detective aka consultant because he does not trust the management layers, they want a neutral party review and a suggestion to fix it, because nobody else did. Makes sense to me and yes, this forum is very capitalism minded, a 100 usd haircut is fine, first impression and all.
Ex McK-Intern here: From my short-term experience, I'd say there are folks who genuinely want to help their clients while others are mostly in for the prestige and the money. The business model of staffing young graduates alongside more experienced people is actually quite reasonable as the experts could steer the overall project while the juniors would do the number crunching and info gathering. I personally see their value for a broader circle in the sense that if the consultants can make a client $$$ or reduce costs, this can either lead to overall improvement of business and thus increase employment or - in case people need to be fired - save the rest of the employees from their whole company going out of business in the worst case. Just to briefly touch the most common criticisms.
Nevertheless, I decided not to take their offer afterwards, partly due to exactly those shady practices that went well beyond even my quite relaxed sense of business ethics.
Nevertheless, I decided not to take their offer afterwards, partly due to exactly those shady practices that went well beyond even my quite relaxed sense of business ethics.
I've worked with all of the big five and I can assure you there is little to no value that they bring to the table.
It's all smoke and mirrors dressed up in suits and sprinkled with corpo-talk that makes no sense if you're a domain expert.
Also, deploying clueless but well dressed junior people and only sending the seasoned specialists to extinguish fires is not a reasonable model. I mean it is if your sole goal is to rip off your client with delivering minimum value.
Also, deploying clueless but well dressed junior people and only sending the seasoned specialists to extinguish fires is not a reasonable model. I mean it is if your sole goal is to rip off your client with delivering minimum value.
I wonder what McKinsey's profit on this gig was - if >= $573M, then this is just the cost of doing business, no problem, do it again and make some more $$.
Profit for a study like this is likely on the order of $1M
Every time I hear about McKinsey in a headline it's for doing something reprehensible.
I know someone who worked for McKinsey for a few years, and some of the projects he described were straight up slimy. The one I recall right now was helping a big payday lender (read: large scale loan shark) figure out how to get their money back from people who were behind on their payments. The problem was that they can only attempt to withdraw so many times from someone's bank before they're banned, so the agreed solution was to estimate the best time of the month when the client had received their paycheck, but before they had used it to pay rent and other expenses.
This person is no longer working there, and I'm not surprised.
This person is no longer working there, and I'm not surprised.
Same with the people I know at Mckinsey. I makes sense though, companies contract out the work that would cause them bad publicity. Then when someone writes a news story they can say "hey, that wasn't us, it was the consultants."
As a very early P2P lending participant in the early days of Prosper Lending, I've seen the other side of this.
Many borrowers adopt a mindset that they have earned the money they borrowed and don't feel that they need to pay it back.
I came in to Prosper with a distaste for the apparent predatory lender tactics and came out with an appreciation that not everything that seems predatory really is. While there are plenty of legitimately shady lending practices, reasonably high APRs and the collection tactic you described are not some of them.
Asserting your debt as more important than someone's housing does seem like a pretty shitbag thing to me.
You say that but every debt company will say that very thing. Miss enough credit card bills, and they come for you; and, in states that don't protect the house, that's fair game.
People say that like the "debt" doesn't ultimately matter - as if adopting a policy of "you only get property ownership rights if you can prove you're sorrier than the person who claimed your stuff" won't lead to calamity over the medium-long term.
The reality is that this is a very difficult situation all around.
1) Lenders probably shouldn't be lending money to people they know cannot repay the debts. This is also why APRs are so high - most people simply don't.
2) People who know they can't repay the debts shouldn't be borrowing in the first place. This is also why lenders have to go to such extremes to collect their debts.
This is a function of being poor in a country like America with zero social safety net. If you're desperate and on the ropes and have nothing to fall back on you'll do whatever it takes to get by including take out loans that you can't afford, from lenders who know you can't repay them.
The problem isn't predatory lending, or deadbeat borrowers, it's a deeply unequal society which doesn't look after its own, with rampant wealth and income inequality and a total lack of social safety net.
In an ideal world, folks would be able to rely on unemployment or UBI to get by tough stretches, and this system would disappear instantly. Half the country is busy breathlessly screaming socialism over what the rest of the world considers a "functioning government" and the other half has other things on their mind like walking back stupid bathroom laws, and in the end, nothing fundamentally changes.
1) Lenders probably shouldn't be lending money to people they know cannot repay the debts. This is also why APRs are so high - most people simply don't.
2) People who know they can't repay the debts shouldn't be borrowing in the first place. This is also why lenders have to go to such extremes to collect their debts.
This is a function of being poor in a country like America with zero social safety net. If you're desperate and on the ropes and have nothing to fall back on you'll do whatever it takes to get by including take out loans that you can't afford, from lenders who know you can't repay them.
The problem isn't predatory lending, or deadbeat borrowers, it's a deeply unequal society which doesn't look after its own, with rampant wealth and income inequality and a total lack of social safety net.
In an ideal world, folks would be able to rely on unemployment or UBI to get by tough stretches, and this system would disappear instantly. Half the country is busy breathlessly screaming socialism over what the rest of the world considers a "functioning government" and the other half has other things on their mind like walking back stupid bathroom laws, and in the end, nothing fundamentally changes.
How do you design an unemployment/UBI system that provides an incentive not to use it unless necessary and not to stay on it any longer than is necessary?
You don't have to.
How many people have you met who were happy doing nothing, living with nothing, AND who made good employees doing anything at all?
I've met exactly zero.
The ambitious won't want to stay there; the unambitious may "unfairly" get their basic needs met, but they're hardly living the high life, and the lost -useful- labor to society is negligible. Almost certainly more than offset by the ambitious who can now take risks they otherwise couldn't, knowing that if they fail they at least aren't going to end up hungry and homeless.
How many people have you met who were happy doing nothing, living with nothing, AND who made good employees doing anything at all?
I've met exactly zero.
The ambitious won't want to stay there; the unambitious may "unfairly" get their basic needs met, but they're hardly living the high life, and the lost -useful- labor to society is negligible. Almost certainly more than offset by the ambitious who can now take risks they otherwise couldn't, knowing that if they fail they at least aren't going to end up hungry and homeless.
This is in line with the results of Canada's early UBI experiments; substantially nobody left the workforce except to pursue liberal arts or stay-at-home parenting, both of which have intrinsic value. People are motivated by a combination of intrinsic and extrinsic factors, including their social group at work, finding meaning in their lives through their work, and so on.
UBI and unemployment isn't provide enough for a lavish lifestyle, you can achieve that through work.
> The ambitious won't want to stay there; the unambitious may "unfairly" get their basic needs met, but they're hardly living the high life, and the lost -useful- labor to society is negligible.
Certainly true, and of course, automation will replace the missing labor in the pool, and the continued march of development will lead to even lower birth rates (already well below replacement rate of 2.1 is almost every developed nation), and there will be fewer and fewer of these folks in time.
Canada's most recent UBI experiment, cancelled recently (2020) by Ford & co, was showing excellent results [1], and so did the earlier one in 1974 [2].
[1] https://newatlas.com/good-thinking/canada-basic-income-exper...
[2] https://www.bbc.com/worklife/article/20200624-canadas-forgot...
UBI and unemployment isn't provide enough for a lavish lifestyle, you can achieve that through work.
> The ambitious won't want to stay there; the unambitious may "unfairly" get their basic needs met, but they're hardly living the high life, and the lost -useful- labor to society is negligible.
Certainly true, and of course, automation will replace the missing labor in the pool, and the continued march of development will lead to even lower birth rates (already well below replacement rate of 2.1 is almost every developed nation), and there will be fewer and fewer of these folks in time.
Canada's most recent UBI experiment, cancelled recently (2020) by Ford & co, was showing excellent results [1], and so did the earlier one in 1974 [2].
[1] https://newatlas.com/good-thinking/canada-basic-income-exper...
[2] https://www.bbc.com/worklife/article/20200624-canadas-forgot...
I think the major fault with these studies is there participants know the benefits will end. I think this biases them towards continued working because they view it as a short term windfall that won’t sustain them rather than a long term solution. It would be incredibly hard to design an experiment to control for this.
Conversely, I think the hard part about implementing UBI is that it would be incredibly hard to roll back once people become accustomed to it
Conversely, I think the hard part about implementing UBI is that it would be incredibly hard to roll back once people become accustomed to it
Indeed, I think the challenge is around committing to a 50 year study that they won't cancel later in a discretionary way.
> Conversely, I think the hard part about implementing UBI is that it would be incredibly hard to roll back once people become accustomed to it
So we are left with something people like and don't want to give up, and that's bad because... :)
> Conversely, I think the hard part about implementing UBI is that it would be incredibly hard to roll back once people become accustomed to it
So we are left with something people like and don't want to give up, and that's bad because... :)
>So we are left with something people like and don't want to give up, and that's bad because... :)
Sorry, I should have taken the time to elaborate.
There’s certainly a conceivable scenario when the situation is either unsustainable or not providing a net benefit.
For the first case, consider a petrostate whose population is heavily subsidized by its oil sales. If oil price drops, whether by lack of demand or over supply, they may not have the funds to continue these benefits without debt, regardless if the populace “likes” them.
In the second scenario, it’s possible that it creates unintended consequences (like spikes in drug use, drop in life expectancy, reduced productivity) that become a larger social ill than what it was trying to prevent. Despite society being worse off, it becomes hard to scale it back because of the psychological endowment effect.
I’m not saying its likely, just as a counter point that just because people like a benefit it means it should continue. I think it’s important to do a “pre-mortem“ on these kinds of policies to make sure we have the guardrails in place before implementing them.
Sorry, I should have taken the time to elaborate.
There’s certainly a conceivable scenario when the situation is either unsustainable or not providing a net benefit.
For the first case, consider a petrostate whose population is heavily subsidized by its oil sales. If oil price drops, whether by lack of demand or over supply, they may not have the funds to continue these benefits without debt, regardless if the populace “likes” them.
In the second scenario, it’s possible that it creates unintended consequences (like spikes in drug use, drop in life expectancy, reduced productivity) that become a larger social ill than what it was trying to prevent. Despite society being worse off, it becomes hard to scale it back because of the psychological endowment effect.
I’m not saying its likely, just as a counter point that just because people like a benefit it means it should continue. I think it’s important to do a “pre-mortem“ on these kinds of policies to make sure we have the guardrails in place before implementing them.
> So we are left with something people like and don't want to give up, and that's bad because... :)
... other people are burdened with providing it against their will.
A Southern plantation owner in the pre Civil War southeast US had something they liked and didn't want to give up and it was most certainly very very bad.
... other people are burdened with providing it against their will.
A Southern plantation owner in the pre Civil War southeast US had something they liked and didn't want to give up and it was most certainly very very bad.
UBI is universal, everyone gets it. I’d wager if you asked slaves if they were enjoying it they’d say no. One of the many problems is they weren’t being asked.
I think the counterpoint is that, while everybody receives the same amount, people contribute differing levels so the net benefit is very different for individuals.
I think this is an affront to some people's ideas of fairness even though it aligns with progressive tax schemes.
I think this is an affront to some people's ideas of fairness even though it aligns with progressive tax schemes.
The question I always wonder, when people bring this up, is if they've applied it to themselves.
If they had a basic UBI of, say, $20k, would they quit their job, and not look for work, not work on personal projects, not look to go back to school, nothing, just do what they are assuming others will do, sit around, watch TV, that sort of thing? Rather than keep striving, keep working, and have both an extra $20k being paid to them currently, and that safety net in place in case they lose their job?
Because I can't imagine doing that. I -like- having a higher quality of life. I desire to do things, to affect things. In fact, the most frustrating jobs I've had were the ones that felt like they handcuffed me from leaving due to the salary (not to mention things like equity cliffs and paying back signon bonus), but deprived me of any real empowerment or responsibility to affect change. If this logic applied to me, I should be thrilled; I barely have to do anything, am barely expected to do anything, and am paid through the nose. But I end up hating it and wanting out.
Even something like working McDonald's; would the additional pay of working there on top of UBI be worth it? If not, what would have to change? Better working conditions? More pay? I'd be interested to find out; why -don't- people find service industry jobs desirable? Why would someone choose to be unemployed, if their disposable income is higher working there? Are they just lazy, as America likes to paint it, or are there institutional problems that could be addressed, but remain unaddressed due to the inability for people to just quit and walk away?
We actually have some anecdotal data to this; people who inherit money sufficient they could live the rest of their lives doing nothing.
If it's multiple millions, yeah, people do decide not to work, "trust fund babies" and the like.
But plenty of people get a few hundred thousand and a house. That's enough that, if invested, they could pay property taxes and live a basic life without working. They could sell the house and move out of the country, and live even cheaper. How many do it in lieu of working? Very few. Why? Because they desire something more.
If they had a basic UBI of, say, $20k, would they quit their job, and not look for work, not work on personal projects, not look to go back to school, nothing, just do what they are assuming others will do, sit around, watch TV, that sort of thing? Rather than keep striving, keep working, and have both an extra $20k being paid to them currently, and that safety net in place in case they lose their job?
Because I can't imagine doing that. I -like- having a higher quality of life. I desire to do things, to affect things. In fact, the most frustrating jobs I've had were the ones that felt like they handcuffed me from leaving due to the salary (not to mention things like equity cliffs and paying back signon bonus), but deprived me of any real empowerment or responsibility to affect change. If this logic applied to me, I should be thrilled; I barely have to do anything, am barely expected to do anything, and am paid through the nose. But I end up hating it and wanting out.
Even something like working McDonald's; would the additional pay of working there on top of UBI be worth it? If not, what would have to change? Better working conditions? More pay? I'd be interested to find out; why -don't- people find service industry jobs desirable? Why would someone choose to be unemployed, if their disposable income is higher working there? Are they just lazy, as America likes to paint it, or are there institutional problems that could be addressed, but remain unaddressed due to the inability for people to just quit and walk away?
We actually have some anecdotal data to this; people who inherit money sufficient they could live the rest of their lives doing nothing.
If it's multiple millions, yeah, people do decide not to work, "trust fund babies" and the like.
But plenty of people get a few hundred thousand and a house. That's enough that, if invested, they could pay property taxes and live a basic life without working. They could sell the house and move out of the country, and live even cheaper. How many do it in lieu of working? Very few. Why? Because they desire something more.
Anecdotally I’ve seen both sides. I’ve seen people get social security or disability benefits and coast for the rest of their lives without working even though they have the ability to do so without affecting their benefits. I assume they value sleeping in and not having to answer to anyone. Their idea of a good time is spending hours hiking or watching tv or various other things that have negligible cost.
I’ve also known those who get said benefits and either use it as a leg-up to get ahead or just donate it while they keep working. Honestly, I’ve seen more in the former category than the latter.
I suspect it cuts down along the industriousness subset of the Big Five personality traits. Those who get intrinsic satisfaction doing/building are probably likely to be in the latter group. I bet HN skews towards this which is why so many find it difficult to comprehend why somebody would want to just loaf around with their life. To your very thoughtful questions about why someone wouldn’t want to continue working, my guess is the roles they qualify for aren’t intrinsically satisfying to them because it’s a poor mating of their personality and the jobs society has deemed necessary or they don’t pay enough to make the juice worth the squeeze
I’ve also known those who get said benefits and either use it as a leg-up to get ahead or just donate it while they keep working. Honestly, I’ve seen more in the former category than the latter.
I suspect it cuts down along the industriousness subset of the Big Five personality traits. Those who get intrinsic satisfaction doing/building are probably likely to be in the latter group. I bet HN skews towards this which is why so many find it difficult to comprehend why somebody would want to just loaf around with their life. To your very thoughtful questions about why someone wouldn’t want to continue working, my guess is the roles they qualify for aren’t intrinsically satisfying to them because it’s a poor mating of their personality and the jobs society has deemed necessary or they don’t pay enough to make the juice worth the squeeze
Yeah; I wasn't saying one side doesn't exist. It was more in tandem with my parent post - the people who are happy to watch TV, hike, just kinda bum around, doing nothing else, desiring nothing else...how often are they great workers?
I meant the question in response to the observation that "we don't know what happens long term if people are promised this kind of money" - right, but the presumption there is that it will cause people to quit en masse, that they won't look to work, or use it as an excuse to better themselves in a way that society values as well. But will you? I mean, you're on HN; you likely care about bettering yourself, likely have some ambitions. If people with those things aren't dissuaded from working...what's the concern? That we won't have enough checked out people in useless administrative tasks, or poorly performing manual labor or service jobs that we then collectively complain about, while also refusing to pay well for?
I meant the question in response to the observation that "we don't know what happens long term if people are promised this kind of money" - right, but the presumption there is that it will cause people to quit en masse, that they won't look to work, or use it as an excuse to better themselves in a way that society values as well. But will you? I mean, you're on HN; you likely care about bettering yourself, likely have some ambitions. If people with those things aren't dissuaded from working...what's the concern? That we won't have enough checked out people in useless administrative tasks, or poorly performing manual labor or service jobs that we then collectively complain about, while also refusing to pay well for?
>what's the concern?
I think the concern is there may not be enough “ambitious” people to maintain productivity to sustain the non-ambitious folks.
Thinking back to a previous job that most people would probably assume employees incredibly driven people, I can honestly say many were not. Hours wasted on long lunches/breakfasts/breaks, surfing the Internet for auctions, bouncing from office to office for hours to gossip, really anything to distract them from the work that needs done, all the while complaining there wasn’t enough time in the day to get it completed. If a “world class” organization is like this I don’t want to know what a “lesser” one is like.
The best employees are always those who value the work itself. I think very few people find their work intrinsically motivating and are only doing it because of an extrinsic reward (status, money, whatever). Unfortunately, after talking to many in that former organization I don’t think they have a very good grasp on what is intrinsically motivating to themselves.
I think the concern is there may not be enough “ambitious” people to maintain productivity to sustain the non-ambitious folks.
Thinking back to a previous job that most people would probably assume employees incredibly driven people, I can honestly say many were not. Hours wasted on long lunches/breakfasts/breaks, surfing the Internet for auctions, bouncing from office to office for hours to gossip, really anything to distract them from the work that needs done, all the while complaining there wasn’t enough time in the day to get it completed. If a “world class” organization is like this I don’t want to know what a “lesser” one is like.
The best employees are always those who value the work itself. I think very few people find their work intrinsically motivating and are only doing it because of an extrinsic reward (status, money, whatever). Unfortunately, after talking to many in that former organization I don’t think they have a very good grasp on what is intrinsically motivating to themselves.
> how often are they great workers?
It's not about them being great workers or not. It's about them carrying their own weight at minimum instead of offloading that burden to the productive members of society.
There's no lack of jobs society needs filled that provides utility to society even when done by bad employees.
I don't think it is unreasonable for the productive to be fully decoupled and unburdened from the willfully unproductive.
It's not about them being great workers or not. It's about them carrying their own weight at minimum instead of offloading that burden to the productive members of society.
There's no lack of jobs society needs filled that provides utility to society even when done by bad employees.
I don't think it is unreasonable for the productive to be fully decoupled and unburdened from the willfully unproductive.
> If they had a basic UBI of, say, $20k, would they quit their job, and not look for work, not work on personal projects, not look to go back to school, nothing, just do what they are assuming others will do, sit around, watch TV, that sort of thing? Rather than keep striving, keep working, and have both an extra $20k being paid to them currently, and that safety net in place in case they lose their job?
Depends on person and their situation.
Would I quit my job and go on UBI if I could?
Me before marriage and a kid: in my line of work and with my hobbies, sure! I'll fulfill my need of doing crazy hobby projects and after few years of doing just that (and social life) I'd probably get bored and get back to work somewhere. Or spin one of my projects into a business. Or start contracting half-time to have some more spending money.
Me now: I'd probably cut down work a bit, but I can use the extra cash to ensure good conditions and financial safety for my kid.
Me if I worked in just about any other field: fuck no, not if I knew the benefits would end. Software industry is special (and still will be for at least a couple of years) - a programmer with decent skills can just find a job or start a company. For every other field, the many years long gap in your CV will scream "not good worker material". Keeping the working history continuous is something on the minds of majority of westerners; failing to do that is likely to result in being hireable only for jobs not much better than the UBI.
Depends on person and their situation.
Would I quit my job and go on UBI if I could?
Me before marriage and a kid: in my line of work and with my hobbies, sure! I'll fulfill my need of doing crazy hobby projects and after few years of doing just that (and social life) I'd probably get bored and get back to work somewhere. Or spin one of my projects into a business. Or start contracting half-time to have some more spending money.
Me now: I'd probably cut down work a bit, but I can use the extra cash to ensure good conditions and financial safety for my kid.
Me if I worked in just about any other field: fuck no, not if I knew the benefits would end. Software industry is special (and still will be for at least a couple of years) - a programmer with decent skills can just find a job or start a company. For every other field, the many years long gap in your CV will scream "not good worker material". Keeping the working history continuous is something on the minds of majority of westerners; failing to do that is likely to result in being hireable only for jobs not much better than the UBI.
There's also nothing stopping people from accumulating all the things they need for a pleasant life of leisure and hobbies and then once they achieve that deciding to freeload off UBI and enjoy those hobbies. I'm less than a decade out from having most of the physical belongings I need for the myriad hobbies I enjoy. Once I get there free time plus 20k a year will be more valuable than being a contributing member of society. This is basically the basis of the entire "dirtbag" lifestyle that many partake in. I've known many dirtbaggers in my life.
The entire idea behind FIRE is achieving a passive income that you earn by being a productive member of society versus UBI giving you for free with no obligation to contribute to society.
The entire idea behind FIRE is achieving a passive income that you earn by being a productive member of society versus UBI giving you for free with no obligation to contribute to society.
Many hobbies produce things that are immensely valuable to society.
>There's also nothing stopping people from accumulating all the things they need for a pleasant life of leisure
I think it’s a stretch to say this is available to most. To say it’s available to anyone doesn’t acknowledge the poor circumstances many are born into simply by chance. While still technically true, the possibility is vanishingly small for many. Policy should be based on what’s best for the general welfare and not a smallish subset
I think it’s a stretch to say this is available to most. To say it’s available to anyone doesn’t acknowledge the poor circumstances many are born into simply by chance. While still technically true, the possibility is vanishingly small for many. Policy should be based on what’s best for the general welfare and not a smallish subset
What do you do about unambitious people who live beyond their UBI means and end up being unable to pay the rent?
What do you do -now- about the ambitious people who live beyond their salaried means and end up being unable to pay the rent?
So what problem does UBI solve, then?
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It guarantees a certain level of means. Obviously. It's not intending to address people who live outside their means; there are other controls for that. It's to ensure that a person's means is sufficient to cover their basic needs.
A person who is responsible with $10 a month may not be a credit risk, but clearly can't cover their needs; a person spending $10k a month when their job pays them only $8k is clearly a credit risk, living outside their means, despite earning enough to cover far more than their basic needs. You're strawmanning.
A person who is responsible with $10 a month may not be a credit risk, but clearly can't cover their needs; a person spending $10k a month when their job pays them only $8k is clearly a credit risk, living outside their means, despite earning enough to cover far more than their basic needs. You're strawmanning.
It's funny how these sort of questions are always being used to counter a safety net for the poor, but at the same time nobody does anything about rampant tax evasion and avoidance, which is much much more money.
It's an implementation question. It's one of the reasons we give people services instead of cash.
> How many people have you met who were happy doing nothing, living with nothing, AND who made good employees doing anything at all?
Several members of my partner's family meet this description. They fit the welfare queen stereotype to a T. That's just immediate family. I've met plenty. Maybe you just don't have contact with people who would?
> Almost certainly more than offset by the ambitious who can now take risks they otherwise couldn't, knowing that if they fail they at least aren't going to end up hungry and homeless.
This is a completely unsubstantiated claim. How are you measuring this and where's the evidence? Yeah, it sounds great and is something people want to believe is true, but where's the hard evidence?
Several members of my partner's family meet this description. They fit the welfare queen stereotype to a T. That's just immediate family. I've met plenty. Maybe you just don't have contact with people who would?
> Almost certainly more than offset by the ambitious who can now take risks they otherwise couldn't, knowing that if they fail they at least aren't going to end up hungry and homeless.
This is a completely unsubstantiated claim. How are you measuring this and where's the evidence? Yeah, it sounds great and is something people want to believe is true, but where's the hard evidence?
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The whole point of UBI is that everyone gets it, unconditionally. There is no not using it or not staying on it. You just get the UBI, and it should be enough to pay for basic living costs, and most people also want to be able to afford luxuries so the incentive to work is not gone.
The "U" in UBI stands for "universal". Everyone gets it all the time.
I would say that while this is a real concern, our current system places way too high a priority on addressing it.
My concern is that lenders will start loaning against it at ridiculously high rates on UBI income streams - "Get 100K today for signing away your UBI payments!" or "just pay us the monthly amount of your UBI payment!".
After thinking about it a while, I realized the law would need to protect the UBI payments from being accessible in bankruptcy. That would significantly limit lenders willing to lend on that money. Those who did would be charging very high-interest rates on it and probably limit the total amount backed by it, so someone can't borrow 200k and then declare bankruptcy but have it be protected.
Even writing this out now, I'm not sure that this would work because I'm not sure how you prioritize lenders for someone's assets who declares bankruptcy.
I also see upward pressure on housing prices - right now, few landlords know what the market can take for pricing. It would be easy to bump everyone's rent by a few hundred dollars when UBI kicks in because you know everyone can afford it.
Technology and the market structure are so efficient at extracting value from things that it's hard to design any policy that will effectively achieve the desired outcome of providing food, clothing, and shelter for all citizens without some wonky unintended consequences.
After thinking about it a while, I realized the law would need to protect the UBI payments from being accessible in bankruptcy. That would significantly limit lenders willing to lend on that money. Those who did would be charging very high-interest rates on it and probably limit the total amount backed by it, so someone can't borrow 200k and then declare bankruptcy but have it be protected.
Even writing this out now, I'm not sure that this would work because I'm not sure how you prioritize lenders for someone's assets who declares bankruptcy.
I also see upward pressure on housing prices - right now, few landlords know what the market can take for pricing. It would be easy to bump everyone's rent by a few hundred dollars when UBI kicks in because you know everyone can afford it.
Technology and the market structure are so efficient at extracting value from things that it's hard to design any policy that will effectively achieve the desired outcome of providing food, clothing, and shelter for all citizens without some wonky unintended consequences.
Congress changes the terms of credit and bankruptcy all the time. See the limitations that lenders bribed Biden into including in his "Bankruptcy Abuse Prevention and Consumer Protection Act". As a part of a UBI law, they could just say that creditors have no right to recover UBI payments. Take everything he owns, but you can't come back next week to take more.
It could be that housing rents in certain situations could increase in response to UBI, but in most cases having more money gives one more choice, not less. A family who are now stuck in a rattrap located conveniently with respect to public transport might move to a better cheaper place in a more remote location and buy an old car. They wouldn't have to stay at the mercy of their current landlord. Other people in other situations might respond in other ways.
It could be that housing rents in certain situations could increase in response to UBI, but in most cases having more money gives one more choice, not less. A family who are now stuck in a rattrap located conveniently with respect to public transport might move to a better cheaper place in a more remote location and buy an old car. They wouldn't have to stay at the mercy of their current landlord. Other people in other situations might respond in other ways.
I hear you, but I still question how long those on UBI could get ahead of the rat traps before the non-rat trap options become their old cost + the cost of UBI, effectively transferring most of the UBI benefit to the landlords and ending us up in a similar place.
In my mind, it's about answering the question of how we lower barriers to moving to ownership and getting people out of the poverty cycles. There are two major hurdles I see:
- The current structure right now, and incentives that exist, are so good at extracting money that they might quickly eat up the additional money handed out - whether it's through financial instruments or increased prices for basic necessities.
- The people that consistently don't have money are bad at earning money, bad at keeping money, or some combination of the two. UBI only helps the people who can't earn money, but doesn't solve the financial literacy problem or the root cause that a group of people is bad at keeping money.
In my mind, it's about answering the question of how we lower barriers to moving to ownership and getting people out of the poverty cycles. There are two major hurdles I see:
- The current structure right now, and incentives that exist, are so good at extracting money that they might quickly eat up the additional money handed out - whether it's through financial instruments or increased prices for basic necessities.
- The people that consistently don't have money are bad at earning money, bad at keeping money, or some combination of the two. UBI only helps the people who can't earn money, but doesn't solve the financial literacy problem or the root cause that a group of people is bad at keeping money.
Naval ravikant put it succinctly , the real issue is that once the 51% know they can vote to redistribute the wealth of the remaining 49%, then that opens the door to...well, the JRE clip goes deeper
https://m.youtube.com/watch?v=eHim7CMOZ6U
https://m.youtube.com/watch?v=eHim7CMOZ6U
And this is supposed to be worse than 1% accumulating most of the wealth how?
Are you ready to argue that the poor are better off when everyone is poor, and inequality is nonexistent ?
Because thats called north korea/ussr... and people routinely risked their lives to escape that equality...
Here is how i think your point of view becomes stronger:
Say inequality exists - but show how did it get there? Is it corrupt wealth? Does inequality persists because movement between wealth levels is becominy stale?
For example, did bezos sell slaves or sell missiles? Or did he get rich getting to sell you stuff which you really like?
Or, is there a chance your avg 1%er could be wiped out tomorrow? Or is being in the 1% sticky...like it is in the UK, Italy and france, where the same 5 families had the same wealth since the middle ages ?
If you have a fair shot at the 1% , and if the road to get there is morally sound, then you wont hear of anyone to complain of inequality.
Show which of the 1% is morally corrupt, and where progress in wealth dynamism is stalling, and im there to argue with you that we need to fix it.
Because thats called north korea/ussr... and people routinely risked their lives to escape that equality...
Here is how i think your point of view becomes stronger:
Say inequality exists - but show how did it get there? Is it corrupt wealth? Does inequality persists because movement between wealth levels is becominy stale?
For example, did bezos sell slaves or sell missiles? Or did he get rich getting to sell you stuff which you really like?
Or, is there a chance your avg 1%er could be wiped out tomorrow? Or is being in the 1% sticky...like it is in the UK, Italy and france, where the same 5 families had the same wealth since the middle ages ?
If you have a fair shot at the 1% , and if the road to get there is morally sound, then you wont hear of anyone to complain of inequality.
Show which of the 1% is morally corrupt, and where progress in wealth dynamism is stalling, and im there to argue with you that we need to fix it.
A big part of the reason that nothing ever changes is because it isn't profitable for things to change, at least not when some moneyed interests can make a profit doing things like predatory lending and others get to have cheap employees.
In other words, the lack of a social safety net isn't just some accident that citizens blundered into. It was engineered and continues to be advanced by the people who make money from it.
In other words, the lack of a social safety net isn't just some accident that citizens blundered into. It was engineered and continues to be advanced by the people who make money from it.
This is a dumb take.
Canada has a very cushy social safety net and still has payday lending with interest rates of 49%.
And the alternative of having payday lending is no lending - that is, these folks would have no way of getting a short term loan. Is that better?
Canada has a very cushy social safety net and still has payday lending with interest rates of 49%.
And the alternative of having payday lending is no lending - that is, these folks would have no way of getting a short term loan. Is that better?
> Is that better?
Usually.
Usually.
Indeed if payday lenders are profitable then they are extracting welfare from the worst off.
Huh? If the poor by Apple phone is able extracting welfare from them?
I think there's a middle ground between "unrestricted predatory lending" and short term lending. The payday loan industry spends a lot of money on lobbying to push things to the former end (see attached article about 1000% interest rates), and have been very successful [1]. (But the overall lack of a social safety net in the US is due to moneyed interests that go well beyond the payday loan industry.)
Yours is a typical HN binary take that holds a thing must be an utterly unalloyed good or it must be banned, there's no middle ground for a thing to be useful when moderated and regulated, and predatory in other circumstances. This is a very common intellectual failure mode.
[1] https://www.nytimes.com/2018/02/02/us/politics/payday-lender...
Yours is a typical HN binary take that holds a thing must be an utterly unalloyed good or it must be banned, there's no middle ground for a thing to be useful when moderated and regulated, and predatory in other circumstances. This is a very common intellectual failure mode.
[1] https://www.nytimes.com/2018/02/02/us/politics/payday-lender...
Not paying back debts as agreed is tantamount to stealing, which is even shittier IMO
For the most part, America abolished debtors prisons in 1833, and they were found unconstitutional in 1983 (Bearden v. Georgia). I say for the most part because that offer doesn't apply to things like fines and court fees [1].
Assuming you're truthful in your application for the loan, it's not theft. It may be a poor decision on the part of the lender, but of course, that's why interest rates exist and scale with your likelihood of nonrepayment.
[1] https://www.forbes.com/sites/nicksibilla/2019/08/30/federal-...
Assuming you're truthful in your application for the loan, it's not theft. It may be a poor decision on the part of the lender, but of course, that's why interest rates exist and scale with your likelihood of nonrepayment.
[1] https://www.forbes.com/sites/nicksibilla/2019/08/30/federal-...
In the first scenario the borrower can't pay their rent, is evicted and possibly becomes homeless.
In the second scenario the worst case is that the payday lender becomes insolvent, the company collapses, and the workers go and find other jobs because they're not the ones suffering financial stress.
How is that worse.
In the second scenario the worst case is that the payday lender becomes insolvent, the company collapses, and the workers go and find other jobs because they're not the ones suffering financial stress.
How is that worse.
[deleted]
While I agree with the comments about predatory lending, I kind of feel that it has more to do with being more financially aware before agreeing to such loans. Payday lending is closer to the predatory lending practices, but I see the same kind of attitude among borrowers at lower interest rate products as well.
Borrowing when you know that you will not be able to repay the loan (or with the intention of not repaying) is also wrong.
> In the second scenario the worst case is that the payday lender becomes insolvent, the company collapses, and the workers go and find other jobs because they're not the ones suffering financial stress.
In this case, the employees of the so called lender are rendered jobless and they don't meet their financial obligations and might become homeless themselves.
Borrowing when you know that you will not be able to repay the loan (or with the intention of not repaying) is also wrong.
> In the second scenario the worst case is that the payday lender becomes insolvent, the company collapses, and the workers go and find other jobs because they're not the ones suffering financial stress.
In this case, the employees of the so called lender are rendered jobless and they don't meet their financial obligations and might become homeless themselves.
Your comparing someone who is in immediate financial stress to a layed off employee who may run into trouble in the future.
I understand the compassion behind your point, but to play devils advocate: doesn’t every bank that holds mortgages and every landlord assume this very thing?
Fall behind far enough and your debt takes priority over staying in your home. Hell, even the government will kick you out if you fall behind far enough on property taxes
Fall behind far enough and your debt takes priority over staying in your home. Hell, even the government will kick you out if you fall behind far enough on property taxes
It ultimately comes down to what type of housing people have a "right" to. If I can't afford the house I bought, I'll need to sell it and downsize or rent a smaller/cheaper place. That's not because the bank is being a shitbag about my debt.
You’ve drawn yourself a caricature of a hard scrabble borrower who’s just trying to make ends meet and has the best of intentions with regards to their debts.
In my Prosper experience that was the rare exception. The typical defaulting borrower bought themselves a shiny new toy and literally felt entitled to the money. As if their success in securing the loan was sufficient justification to have earned the money outright.
The drama on the Prosper lending forums, where lenders and borrowers could directly communicate with each other, was epic and educational.
In my Prosper experience that was the rare exception. The typical defaulting borrower bought themselves a shiny new toy and literally felt entitled to the money. As if their success in securing the loan was sufficient justification to have earned the money outright.
The drama on the Prosper lending forums, where lenders and borrowers could directly communicate with each other, was epic and educational.
Why does Prosper encourage loans for the purchase of shiny toys? Does this service benefit their customers?
Then don't borrow what you can't afford to pay back? When you borrow money from someone, you explicitly enter a contract with a legal understanding that you will pay it off back in a stipulated time. When you go back on your word, it's not only unprofessional, it is also a breach of that contract. So, the other party should be free to get back their money in whatever means legally possible within the boundaries of the law. Getting back their money from your account when it's most likely to exist isn't a bad idea after all.
Not everyone who borrows money is a "victim" and not everyone who asks for their money back is a "predator". It's not so black and white. I've lost money to worthless people who lied while borrowing only to find out they blew it all on prostitutes instead of that family emergency they claimed they had.
Not everyone who borrows money is a "victim" and not everyone who asks for their money back is a "predator". It's not so black and white. I've lost money to worthless people who lied while borrowing only to find out they blew it all on prostitutes instead of that family emergency they claimed they had.
>reasonably high APRs
I think the disagreement may be on the definition of “reasonable”.
Similar to utilities, I don’t think most people begrudge a company for making a “reasonable” profit. The problem sometimes comes when it starts to become unreasonable level of profit, predicated on lack of transparency and shady tactics
I think the disagreement may be on the definition of “reasonable”.
Similar to utilities, I don’t think most people begrudge a company for making a “reasonable” profit. The problem sometimes comes when it starts to become unreasonable level of profit, predicated on lack of transparency and shady tactics
How do people have such a strong opinion on what level of profit is reasonable if they don't know the default rate?
The average person thinks companies make over 5x the profit they actually make, and they think the amount of profit correlates negatively with how responsible and good for the world the company is (when in fact there's very little discernable correlation, and it may be positive). What profit people begrudge is likely not particularly relevant, given how uneducated those opinions generally are.
The average person thinks companies make over 5x the profit they actually make, and they think the amount of profit correlates negatively with how responsible and good for the world the company is (when in fact there's very little discernable correlation, and it may be positive). What profit people begrudge is likely not particularly relevant, given how uneducated those opinions generally are.
I’m pretty agnostic in my opinion on this personally because I don’t know their profit margin, default rate etc. I also think these lenders fulfill a worthwhile service in some cases. Note that I didn’t actually define what reasonable should be.
People do get a say in the policies of their society in a democracy, whether educated or not. People also think NASAs budget is 50x what it is, but it doesn’t mean we should strip away their right to vote, it means they need to be educated (or their representatives, by proxy). Otherwise it’s just advocating for a technocracy
People do get a say in the policies of their society in a democracy, whether educated or not. People also think NASAs budget is 50x what it is, but it doesn’t mean we should strip away their right to vote, it means they need to be educated (or their representatives, by proxy). Otherwise it’s just advocating for a technocracy
Otherwise it’s just advocating for a technocracy
A technocratic republic, maybe where we got to pick who ends up on legislative subcommittees ourselves[0], might actually be a good thing.
[0] Obviously we can imagine many other forms for a technocratic republic to take; this is just the most similar to the current system, and thus maybe least unreasonable in a path-dependency sense.
A technocratic republic, maybe where we got to pick who ends up on legislative subcommittees ourselves[0], might actually be a good thing.
[0] Obviously we can imagine many other forms for a technocratic republic to take; this is just the most similar to the current system, and thus maybe least unreasonable in a path-dependency sense.
> if they don't know the default rate?
It's rarely ever been above 5%. Plus, a default doesn't necessarily mean the creditor lost money equal to the full value of the loan plus all interest payments. Some defaults are haircuts, some a break-even, and others simply fail to realize their full value.
> and they think the amount of profit correlates negatively with how responsible and good for the world the company is (when in fact there's very little discernable correlation, and it may be positive).
Sure, you just have to be willing to ignore "fairness, consumer protection, environmental protection satisfaction, and employee satisfaction" when considering "corporate social responsibility."
> given how uneducated those opinions generally are
So, do they merely have these opinions because they are uneducated or because they're misplacing blame in the system?
It's rarely ever been above 5%. Plus, a default doesn't necessarily mean the creditor lost money equal to the full value of the loan plus all interest payments. Some defaults are haircuts, some a break-even, and others simply fail to realize their full value.
> and they think the amount of profit correlates negatively with how responsible and good for the world the company is (when in fact there's very little discernable correlation, and it may be positive).
Sure, you just have to be willing to ignore "fairness, consumer protection, environmental protection satisfaction, and employee satisfaction" when considering "corporate social responsibility."
> given how uneducated those opinions generally are
So, do they merely have these opinions because they are uneducated or because they're misplacing blame in the system?
> It's rarely ever been above 5%. Plus, a default doesn't necessarily mean the creditor lost money equal to the full value of the loan plus all interest payments. Some defaults are haircuts, some a break-even, and others simply fail to realize their full value.
Citation on ~5%? I've seen occasional claims that it's that low, but I've often seen it quoted in the ~20-25% range as well. And that ignores the money spent on trying to get borrowers to make good, as well.
> you just have to be willing to ignore fairness, consumer protection, environmental protection satisfaction, and employee satisfaction
Nah, some of the most profitable corporations score really well there. High profit is not well-correlated with bad behavior, even though some bad behaviors can bring high profits. It often just means the company is really good at bringing people things they find useful.
> So, do they merely have these opinions because they are uneducated or because they're misplacing blame in the system?
The people are often educated -- they're merely uneducated on the relevant info for that particular question. Most people don't know how the major systems they interact with work; we should expect them to misplace blame.
Citation on ~5%? I've seen occasional claims that it's that low, but I've often seen it quoted in the ~20-25% range as well. And that ignores the money spent on trying to get borrowers to make good, as well.
> you just have to be willing to ignore fairness, consumer protection, environmental protection satisfaction, and employee satisfaction
Nah, some of the most profitable corporations score really well there. High profit is not well-correlated with bad behavior, even though some bad behaviors can bring high profits. It often just means the company is really good at bringing people things they find useful.
> So, do they merely have these opinions because they are uneducated or because they're misplacing blame in the system?
The people are often educated -- they're merely uneducated on the relevant info for that particular question. Most people don't know how the major systems they interact with work; we should expect them to misplace blame.
[deleted]
> I think the disagreement may be on the definition of “reasonable”.
Agreed. It very much does depend on the default rate.
FWIW when I now see 10%+ APRs on unsecured loans for presumably highly rated borrowers and much higher rates for riskier borrowers, I’m no longer shocked.
Agreed. It very much does depend on the default rate.
FWIW when I now see 10%+ APRs on unsecured loans for presumably highly rated borrowers and much higher rates for riskier borrowers, I’m no longer shocked.
I'm not opposed to collection (it's your right after all) but what would you describe as a reasonably high APR?
yeah a lender trying to get back principal seems pretty ordinary, i thought the bad behavior is making it hard to pay down to drag out the interest payments.
>so the agreed solution was to estimate the best time of the month when the client had received their paycheck, but before they had used it to pay rent and other expenses.
The Purdue OxyContin's 12 hours higher dose and thus higher addictiveness "solution" instead of the 8 hour based lower dose cycle similarly bears all the hallmarks of being produced by MBA consultants.
The Purdue OxyContin's 12 hours higher dose and thus higher addictiveness "solution" instead of the 8 hour based lower dose cycle similarly bears all the hallmarks of being produced by MBA consultants.
Along with the whole different release times thing.
People obviously have different metabolisms, so the duration of effect was different for different people. When these people told their doctors that their dose didn't last a full 8 hours, and they were experiencing pain after, say, 6 hours... their doctors were advised by Purdue to simply up their dosage, rather than give them a different dosing schedule. Pretty direct approach to creating addicts.
People obviously have different metabolisms, so the duration of effect was different for different people. When these people told their doctors that their dose didn't last a full 8 hours, and they were experiencing pain after, say, 6 hours... their doctors were advised by Purdue to simply up their dosage, rather than give them a different dosing schedule. Pretty direct approach to creating addicts.
Time-release to begin with was the strategy to re-patent a prescribable habit-forming API (Active Pharmaceutical Ingredient) whose underlying patent itself had already expired.
Turned out to be even more of a gold mine since the FDA approved formulations where each tablet simply contained way more of the API than it had on the label.
Full detailed data from the clinical trials supported the labeling for each tablet to show the amount from that tablet that would be released into the bloodstream when taken as directed, not the actual full amount of API in each tablet.
For the "taken as directed" dosing to be reliable enough for doctors to correctly gauge how much habit-forming toxic API their patients were absorbing compared to established & generic non-time-release formulations, the target is for the time release pills to have quite a bit of API remaining at the baseline upon excretion.
But this is an API that opiate addicts crave and it didn't take long for them to figure out they could simply crush the pills to ingest the full amount of API a tablet contained.
On the black market this escalated each pill to the top shelf category.
For addicts and chronic pain patients building a progressive tolerance they can't get enough, and this is the regular kind of opiate API that has always fomented eventual overdose when the increases are not curtailed and the toxic effects become much more prominent or fatal.
For any patient on generics who wanted _more drugs_, if they got switched to Oxycontin at the same dose they were a happy camper. Until they wanted even more. But multiple time-release pills were not in the prescribing guidelines so Purdue escalated by stepping up to the plate and developing stronger-dose product in the same time-release formulation.
This was a sign that so many people were building up a tolerance where it took more API to give them the same perceived effect.
The non-addicted occasional consumer of these powerful pain pills could sell their surplus for more each year. The financial incentive to refill prescriptions is greatest for those who don't actually take any of the pills. The Sacklers got richer at the same rate as the drug dealers too, since they raised the pharmaceutical price in step with the increases in street price.
The growing financial economy paralled the spread of the tolerance-building consumption habit, so realistically the demand was stronger than that from all of the ultimate consumers' habits by a large margin.
Opium wars had been fought over this kind of thing.
Doctors, nurses, patients, addicts, narcotics agencies were raking in the bucks like there was no tomorrow, and even those who were not benefitting by one dime were not going to stop.
Sacklers simply declared opium wars and the casualties are still mounting.
Turned out to be even more of a gold mine since the FDA approved formulations where each tablet simply contained way more of the API than it had on the label.
Full detailed data from the clinical trials supported the labeling for each tablet to show the amount from that tablet that would be released into the bloodstream when taken as directed, not the actual full amount of API in each tablet.
For the "taken as directed" dosing to be reliable enough for doctors to correctly gauge how much habit-forming toxic API their patients were absorbing compared to established & generic non-time-release formulations, the target is for the time release pills to have quite a bit of API remaining at the baseline upon excretion.
But this is an API that opiate addicts crave and it didn't take long for them to figure out they could simply crush the pills to ingest the full amount of API a tablet contained.
On the black market this escalated each pill to the top shelf category.
For addicts and chronic pain patients building a progressive tolerance they can't get enough, and this is the regular kind of opiate API that has always fomented eventual overdose when the increases are not curtailed and the toxic effects become much more prominent or fatal.
For any patient on generics who wanted _more drugs_, if they got switched to Oxycontin at the same dose they were a happy camper. Until they wanted even more. But multiple time-release pills were not in the prescribing guidelines so Purdue escalated by stepping up to the plate and developing stronger-dose product in the same time-release formulation.
This was a sign that so many people were building up a tolerance where it took more API to give them the same perceived effect.
The non-addicted occasional consumer of these powerful pain pills could sell their surplus for more each year. The financial incentive to refill prescriptions is greatest for those who don't actually take any of the pills. The Sacklers got richer at the same rate as the drug dealers too, since they raised the pharmaceutical price in step with the increases in street price.
The growing financial economy paralled the spread of the tolerance-building consumption habit, so realistically the demand was stronger than that from all of the ultimate consumers' habits by a large margin.
Opium wars had been fought over this kind of thing.
Doctors, nurses, patients, addicts, narcotics agencies were raking in the bucks like there was no tomorrow, and even those who were not benefitting by one dime were not going to stop.
Sacklers simply declared opium wars and the casualties are still mounting.
Considering the sacrifice and hard work that people make to get into a top management consultancy, no one leaves due to ethical concerns. If they do, the entire world comes to know about it through self-promotion (hire me! buy my book! hear my TED talk). People rationalize morally questionable behavior in all walks of life. Management consultants aren't even the decision makers who have to pull the trigger, and it's far easier to sleep at night as an advisor than it is an operator.
It's slimy to try and collect on payments that a consumer agreed to make? Is that what you're saying?
We know that interest is a parasitic, immoral, and destructive practice. The banks are in bed with the government, so they are allowed to lend with interest, however, how are payday lenders allowed to operate? Who are they bribing?
One of the Mckinsey decks that got leaked can be found here in case anyone's curious
https://www.reddit.com/r/consulting/comments/k2c8ku/mckinsey...
https://www.reddit.com/r/consulting/comments/k2c8ku/mckinsey...
One of my first jobs out of college was at small management consulting firm founded by an formerly very high level McKinsey guy. In a bigger firm, I wouldn't have had much contact with this person, but since we were tiny, he would often be out in the field with the junior people.
One week I found myself with him in some faraway city. We were a bit lost (this was before smartphones) and late for our next appointment. He was frustrated about it because we couldn't get a cab to save our lives. As the minutes ticked by, he'd get more and more irritated, muttering to himself about losing the fucking clients, etc. You can imagine one of these master-of-the-universe types when they get indignant; it's just like the movies.
At some point in all the running around, he notices how he's acting and tries to summon some perspective on it all, get out of his frustration. "You know," he said, "when the plague comes, society's not gonna need management consultants, nor is anyone gonna miss us. We'll get to the meeting when we get to the meeting; no one's gonna die because we're not there."
From a guy who I'd only known as this very hard-charging white collar business guru, a guy who fell out of a Tom Wolfe novel, this was unexpected and funny to young, naive, impressionable me. I got the impression that while he may not have completely rid himself of being annoyed at being late, he was also sincere. I think about this moment a few times a year, actually, something I wouldn't have predicted.
Looking back on it, I'm pretty sure that at the highest levels, these people know that they're not giving civilization all that much, and that this is never very far from their minds.
One week I found myself with him in some faraway city. We were a bit lost (this was before smartphones) and late for our next appointment. He was frustrated about it because we couldn't get a cab to save our lives. As the minutes ticked by, he'd get more and more irritated, muttering to himself about losing the fucking clients, etc. You can imagine one of these master-of-the-universe types when they get indignant; it's just like the movies.
At some point in all the running around, he notices how he's acting and tries to summon some perspective on it all, get out of his frustration. "You know," he said, "when the plague comes, society's not gonna need management consultants, nor is anyone gonna miss us. We'll get to the meeting when we get to the meeting; no one's gonna die because we're not there."
From a guy who I'd only known as this very hard-charging white collar business guru, a guy who fell out of a Tom Wolfe novel, this was unexpected and funny to young, naive, impressionable me. I got the impression that while he may not have completely rid himself of being annoyed at being late, he was also sincere. I think about this moment a few times a year, actually, something I wouldn't have predicted.
Looking back on it, I'm pretty sure that at the highest levels, these people know that they're not giving civilization all that much, and that this is never very far from their minds.
While amusing, this attempts to humanize them and somewhat whitewash their abominable actions. They are sitting at the top of the power matrix making lives miserable and dangerous for the ones with least power - paycheck to paycheck workers, those with addictions, inmates in Rikers, dissidents.
The fact that they are aware of their own lack of usefulness makes the whole enterprise even more cynical and shady.
The fact that they are aware of their own lack of usefulness makes the whole enterprise even more cynical and shady.
To the extent that telling you all this story was an attempt to humanize these guys and "whitewash" their behavior (it wasn't), I have some bad news for you: they're human.
It does nothing against evil to pretend that the world is composed of a small number of monsters and the rest of us good ones.
I'm the first one to agree with you: consulting - hell, fundamental aspects of capitalism itself - are deeply cynical and morally suspect, and result in a lot of unnoticed pain and death and ruin. But in my view, ignoring the fact that criminals of all types go home and kiss their children at night, and mean it, is part of what keeps us locked in the status quo.
And by the way: instead of ascribing intentions to me that you, as the reader, can't know for sure from the text alone, why not just ask me what my intentions are?
It does nothing against evil to pretend that the world is composed of a small number of monsters and the rest of us good ones.
I'm the first one to agree with you: consulting - hell, fundamental aspects of capitalism itself - are deeply cynical and morally suspect, and result in a lot of unnoticed pain and death and ruin. But in my view, ignoring the fact that criminals of all types go home and kiss their children at night, and mean it, is part of what keeps us locked in the status quo.
And by the way: instead of ascribing intentions to me that you, as the reader, can't know for sure from the text alone, why not just ask me what my intentions are?
The problem is a systemic one - people respond to structural incentives. We can't get a better world by insisting that people rely entirely on their moral compass to resist strong incentives - we need to change the incentives themselves. Every time we say "those people are just evil" instead of "how can we adjust our social structures so moral crime doesn't pay", we strip ourselves of the only real path forwards. "personal responsibility" is the worst possible doctrine for systemic change.
Firefly quote comes to mind: "They'll swing back to the belief that they can make people... better."
Are people downvoting you because they don't want to humanize someone they hate? Or am I missing something?
You'll have to ask them, I guess, but that's what it looks like. (Encouragingly though, way more ups than downs.)
I’m downvoting it because it paints all management consultants with a broad brush of ‘being evil’ which clearly isn’t accurate.
> While amusing, this attempts to humanize them and somewhat whitewash their abominable actions.
Ouch - I’m a supply chain consultant (only one shade away!) is the implication that I am less than human and totally spineless? I know management consultants and most of them do in fact have a spine and are just trying to help companies work better.
> While amusing, this attempts to humanize them and somewhat whitewash their abominable actions.
Ouch - I’m a supply chain consultant (only one shade away!) is the implication that I am less than human and totally spineless? I know management consultants and most of them do in fact have a spine and are just trying to help companies work better.
This is certainly true. I know Godwin's law, but there are some good books and stories (not sure if translated to English), of the children of SS officers, concentration camp guards etc.. They started asking questions of their parents when they got older (or sometimes only after their father died) and found out that the loving and caring father had been a monster at some point.
It just shows that I, you and the average person is much closer to them than we think.
If you put enough money on the table I'm sure many more people would do the same thing as those currently in power. It's just that most people don't have the opportunity to sell out.
That's the scary truth I think.
If you put enough money on the table I'm sure many more people would do the same thing as those currently in power. It's just that most people don't have the opportunity to sell out.
That's the scary truth I think.
I'm not sure it's all that different from you or I when we are uncaring towards a homeless person asking for money, or when we decide we value a latte more than a week's worth of meals for a starving child in Africa.
Everyone seems to imagine their actions are "normal" and "socially appropriate" but if only they were to break out of their lot in life and reach that next rung up, suddenly they'd be more generous, more compassionate, not driven by the same things, etc.
Everyone seems to imagine their actions are "normal" and "socially appropriate" but if only they were to break out of their lot in life and reach that next rung up, suddenly they'd be more generous, more compassionate, not driven by the same things, etc.
Advising a pharma company on how to turbocharge opioid sales and fan the flames of a raging painkiller epidemic resulting in 450,000 deaths is same as not giving money to a homeless person.
I am utterly flabbergasted. Words fail me which is rarely the case ;)
I am utterly flabbergasted. Words fail me which is rarely the case ;)
Hate the game, don't hate the player
> The fact that they are aware of their own lack of usefulness makes the whole enterprise even more cynical and shady.
Some would say this was the origin of charity and corporate social responsibility. It was born as a financial optimization to hedge against optics risk, to engage in moral licensing. And it does its job very well there -- not in spite of, but because it directly humanizes the company and its executives.
Some would say this was the origin of charity and corporate social responsibility. It was born as a financial optimization to hedge against optics risk, to engage in moral licensing. And it does its job very well there -- not in spite of, but because it directly humanizes the company and its executives.
> when the plague comes
It might have helped to have some mgmt consultants on vaccine distribution.
It might have helped to have some mgmt consultants on vaccine distribution.
Not management consultants specifically, but I get the vague sense that it'd go not too different from this Deloitte situation: https://www.technologyreview.com/2021/01/30/1017086/cdc-44-m...
I have worked for a startup operated by a McKinsey alum; he was totally incompetent, throwing buzzwords around constantly without understanding what they meant. I have come to realize his entire strategy was to purchase the company, dress it up in new clothes (without understanding tailoring or fabric) and sell it to another rube.
To whom do the settlement proceeds go?
Lets not forget this episode where McKinsey charged NYC $27 million for a flawed, nay, doctored analysis which actually caused violence to soar at Rikers. The software they delivered never worked. The sheer notion of Harvard/Princeton educated McKinsey consultants ripping off NYC for millions and putting inmates at Rikers at more risk of violence is sickening.
https://www.propublica.org/article/new-york-city-paid-mckins...
https://www.propublica.org/article/new-york-city-paid-mckins...
This statement says that 40+ US States and DC. I have seen 50 states in other articles.
Does this mean that the Feds can still go after them? The Dems are historically very friendly to the Pharma industry in ensuring outcomes in-spite of populist posturing. Can Medicare/Medicaid/VA sue them for recovery of monies spent in treating addictions and prescriptions?
Does this mean that the Feds can still go after them? The Dems are historically very friendly to the Pharma industry in ensuring outcomes in-spite of populist posturing. Can Medicare/Medicaid/VA sue them for recovery of monies spent in treating addictions and prescriptions?
Let's not forget, these are the same consultants that did work for Enron, work leading up to the 2008 financial crisis.[0] McKinsey is also advising various government agencies on optimizing their Covid-19 response[1], generating revenue of $100m and counting.
[0] https://en.wikipedia.org/wiki/McKinsey_%26_Company#Controver...
[1] https://www.propublica.org/article/how-mckinsey-is-making-10...
[0] https://en.wikipedia.org/wiki/McKinsey_%26_Company#Controver...
[1] https://www.propublica.org/article/how-mckinsey-is-making-10...
Worse. Most of Enron management was directly sourced from McKinsey and McKinsey was intricately involved in its strategy and accounting. One day the story will be told of how they got away with it but Andersen took the whole blame.
https://www.independent.co.uk/news/business/analysis-and-fea...
https://www.independent.co.uk/news/business/analysis-and-fea...
"The Smartest Guys in the Room" told that story, and the short version is that Andersen was the auditor which was supposed to be ferreting out accounting issues (and has certain legal responsibilities). McKinsey was a recruiting ground and consultant.
That is not what this article says:
https://www.theguardian.com/business/2002/mar/24/enron.theob...
McKinsey was integral to designing Enron's asset light strategy and also creating the stock borrow structure, their internal talent marketplace, etc. etc. Seems like where Enron stopped and McKinsey started is hard to place.
https://www.theguardian.com/business/2002/mar/24/enron.theob...
McKinsey was integral to designing Enron's asset light strategy and also creating the stock borrow structure, their internal talent marketplace, etc. etc. Seems like where Enron stopped and McKinsey started is hard to place.
Consultants are often deeply entwined in their companies, particularly when people like Skilling were from the consultancy.
The auditor on the other hand has a duty to the shareholders. The whole point of independent financial audits is to guarantee the completeness and veracity of financial statements.
The auditor on the other hand has a duty to the shareholders. The whole point of independent financial audits is to guarantee the completeness and veracity of financial statements.
This type of scenario is probably the primary reason for the existence of management consulting firms: to have someone to point the finger to when risky decisions go tits up.
That and to push through unpopular decisions: "look we don't want to fire 30% of our workforce, but the consultants told us we need to to maintain our profit margin"
You make it sound like it's bad thing to help governments optimize their Codiv-19 response?
No one ever admits guilt. No one ever goes to prison. These fines are just "cost of doing business".
[deleted]
This is going to sound heavy-handed but what they did was terroristic. It undermined individuals, families, and the social fabric. It's not a passing event but an endless altering of fulfilling lives.
The dollar amount might feel impressive. But keep in mind the actual employees who contributed to the "turbochargeing" aren't paying that, and they are still walking the streets.
I can't imagine how this is Justice, or even justice.
The dollar amount might feel impressive. But keep in mind the actual employees who contributed to the "turbochargeing" aren't paying that, and they are still walking the streets.
I can't imagine how this is Justice, or even justice.
Failure of free market mechanism?
McKinsey optimized the business strategy to maximize profit. The strategy is locally optimal but a net negative at society scale.
I always puzzle why some economists oppose the basic idea of regulating drugs. Layman like us won't have the prior knowledge to tell the difference between snake oil and effective treatment. Drug maker won't have the incentive to conduct expensive randomized trials. Are we going to tell by reading Amazon reviews?
McKinsey optimized the business strategy to maximize profit. The strategy is locally optimal but a net negative at society scale.
I always puzzle why some economists oppose the basic idea of regulating drugs. Layman like us won't have the prior knowledge to tell the difference between snake oil and effective treatment. Drug maker won't have the incentive to conduct expensive randomized trials. Are we going to tell by reading Amazon reviews?
McKinsey is a firm that simply does not do good work. I am unclear on what value their clients derive from them and why it has the reputation of being a good place to work at or have on your resume. They're basically opinion guns for hire, who can parallel construct their way to whatever conclusion you want, granting the goals of [your company or government agency] a sheen of legitimacy. They manage to avoid oversight regularly (https://www.nytimes.com/2019/12/14/sunday-review/mckinsey-ic...). They have a history of of corrupt leaders and fingerprints on numerous fiscal disasters (https://www.independent.co.uk/news/business/analysis-and-fea...).
They are also very careful to play the PR game well. A good example of their incompetency intersecting with their PR efforts is their spurious claims on diversity (https://www.mckinsey.com/business-functions/organization/our...). The "Diversity Matters" report here has been quoted by virtually everyone - from the Harvard Business Review to corporate HR teams. And it is remarkably deceptive, because it has been bandied about as evidence that more diversity = better outcomes. Their own study at the link above admits there is no casual link here. It states this in an incredibly misleading way:
> While correlation does not equal causation (greater gender and ethnic diversity in corporate leadership doesn’t automatically translate into more profit), the correlation does indicate that when companies commit themselves to diverse leadership, they are more successful.
And now here we are, with corporations normalizing discriminatory practices relating to hiring, promotion, and so forth.
They are also very careful to play the PR game well. A good example of their incompetency intersecting with their PR efforts is their spurious claims on diversity (https://www.mckinsey.com/business-functions/organization/our...). The "Diversity Matters" report here has been quoted by virtually everyone - from the Harvard Business Review to corporate HR teams. And it is remarkably deceptive, because it has been bandied about as evidence that more diversity = better outcomes. Their own study at the link above admits there is no casual link here. It states this in an incredibly misleading way:
> While correlation does not equal causation (greater gender and ethnic diversity in corporate leadership doesn’t automatically translate into more profit), the correlation does indicate that when companies commit themselves to diverse leadership, they are more successful.
And now here we are, with corporations normalizing discriminatory practices relating to hiring, promotion, and so forth.
I've worked with them and helped implement some of their recommendations. They do brilliant work and have some very clever people. They also do some very awful things and have some dumb people.
Your starting line is overly reductive and not based in fact.
Your starting line is overly reductive and not based in fact.
This is far too low. A fine large enough to destroy the company (as was effectively done to Purdue) would have been the only palatable outcome. And even more importantly, legal repercussions for all their employees who were personally responsible for this.
All this settlement achieves is 'a cost of doing business', as they say. It's not punishment or deterrence. McKinsey and other companies like them will do similar in the future, and simply pay it off, again.
All this settlement achieves is 'a cost of doing business', as they say. It's not punishment or deterrence. McKinsey and other companies like them will do similar in the future, and simply pay it off, again.
If big companies started facing consequences for their actions our economy would fall apart.
Why? Because people would actually be held accountable for their decisions? Shouldn't that be how it works to begin with? It would be painful in the short term but in the long term i think it would make people better off
I agree that it shouldn't be this way, but I remember 2008 and the fact that zero people were punished. The US government will protect corporate profits at all costs.
I agree, but I'm not really sure what that has to do with this:
> If big companies started facing consequences for their actions our economy would fall apart.
> If big companies started facing consequences for their actions our economy would fall apart.
There are enough large companies who have committed misdeeds worthy of major consequences that if we actually punished all of them in a meaningful way, the economy would fall apart, because there would not be many companies left.
on the contrary, it would create opportunity for actually well-run businesses that benefits the customer to take their place
> it would create opportunity for actually well-run businesses that benefits the customer to take their place
This assumes that you have a functional society after say...Chase or Nestle or Pfizer or Boeing or Disney, etc becomes insolvent. You will lose more than a decade in churn as the monopolies (enough that they can dictate legislative agendas) leave huge gaps that are inevitably filled with instability. The "good actors" that would backfill is a utopian fantasy. Different names, different brands, but the same kinds of people would end up in the same positions of influence. That's how the (mostly) capitalistic system operates.
This assumes that you have a functional society after say...Chase or Nestle or Pfizer or Boeing or Disney, etc becomes insolvent. You will lose more than a decade in churn as the monopolies (enough that they can dictate legislative agendas) leave huge gaps that are inevitably filled with instability. The "good actors" that would backfill is a utopian fantasy. Different names, different brands, but the same kinds of people would end up in the same positions of influence. That's how the (mostly) capitalistic system operates.
They dont need to be good, they need to have real competition and realisation that is they break the law they will be slapped hard
Also, we wont have functional society without Dysney and Nestle? What, society will collapse if we run out of chocolates and movies? People won't have diabetes?
Also, we wont have functional society without Dysney and Nestle? What, society will collapse if we run out of chocolates and movies? People won't have diabetes?
> we wont have functional society without Disney and Nestle? What, society will collapse if we run out of chocolates and movies?
The breadth of these companies is almost immeasurable. Nestle owns an immense amount of resource rights (eg the largest siphon of natural water from the Los Angeles basin) and industry (#1 food producing company in the world). Disney is the leading intellectual property holder of the world. The ubiquity, innate cultural knowledge, and economic strength of corporate entities in the world are part of what keep society stable. The brands are stable, so families are able to be stable and confident about the future.
This is why I picked out examples from multiple industries, all of which are known actors, who have been slapped on the hand for heinous acts over recent time.
The breadth of these companies is almost immeasurable. Nestle owns an immense amount of resource rights (eg the largest siphon of natural water from the Los Angeles basin) and industry (#1 food producing company in the world). Disney is the leading intellectual property holder of the world. The ubiquity, innate cultural knowledge, and economic strength of corporate entities in the world are part of what keep society stable. The brands are stable, so families are able to be stable and confident about the future.
This is why I picked out examples from multiple industries, all of which are known actors, who have been slapped on the hand for heinous acts over recent time.
> Nestle owns an immense amount of resource rights
Natural resources won't go away with the company that has scammed society to gain control of them.
> Disney is the leading intellectual property holder of the world.
I'm sorry, but how is that supposed to be an argument that removing Disney would have negative consequences?
Natural resources won't go away with the company that has scammed society to gain control of them.
> Disney is the leading intellectual property holder of the world.
I'm sorry, but how is that supposed to be an argument that removing Disney would have negative consequences?
So we fine Starbucks for tax evasion, they close shop and you think they will not he replaced by local businesses literally overnight?
'The brands are stable, so families are able to be stable and confident about the future.'
You mean zero-hour workers at Dysney, or warehouse workers at Amazon that confidently piss in a bottle?
'The brands are stable, so families are able to be stable and confident about the future.'
You mean zero-hour workers at Dysney, or warehouse workers at Amazon that confidently piss in a bottle?
I don't even know where to begin with this comment.
Name a big company or C-level executive that has faced any meaningful consequences for their misdeeds in the last 15 years. I can think of Bernie Madoff, but he was punished because he swindled rich people. If he swindled poor people he'd be on the cover of Fortune magazine.
I agree that big companies don't face meaningful consequences often enough for their misdeeds.
My comment was referring to your statement that if we did hold them accountable, the economy would fall apart.
My comment was referring to your statement that if we did hold them accountable, the economy would fall apart.
Why do we cling to the idea that the present form of our economy is somehow justified or sustainable?
its easier to imagine the end of the world than the end of capitalism
The comment is descriptive, not prescriptive I think. It is also probably correct as descriptions go.
If big companies face no consequences, then our society will fall apart. They have ruined millions of lives and are responsible for a large portion of the 450k overdose deaths from 1999 to 2018.
It amounts to literal gambling with people's lives and the individuals responsible face almost no risk. The worst thing that happens is that their company has to pay a big fine. Someone who steals a car will face a multi year federal sentence. Who had the biggest negative impact on society, the dude that stole a car or the people responsible for hundreds of thousands of deaths?
It amounts to literal gambling with people's lives and the individuals responsible face almost no risk. The worst thing that happens is that their company has to pay a big fine. Someone who steals a car will face a multi year federal sentence. Who had the biggest negative impact on society, the dude that stole a car or the people responsible for hundreds of thousands of deaths?
>If big companies face no consequences, then our society will fall apart.
It currently is and I don't see any sign of it stopping. The foundation was laid in the 80s, the roof fell in on January 6th, and the Democrats don't have enough of a spine to actually fix the problem because Republicans keep calling them mean names.
It currently is and I don't see any sign of it stopping. The foundation was laid in the 80s, the roof fell in on January 6th, and the Democrats don't have enough of a spine to actually fix the problem because Republicans keep calling them mean names.
The fault in our society is not that one party is bad and the other party it's good, it's that both parties think that about each other and believe a whole bunch of distortions based on the extremes of either party. Rs think Ds are destroying our society just as much as Ds think Rs are doing the same. Both sides are vilifying Is for not taking enough of a stand on The Issues That Will End The World TM.
The only way out is to fix that mutual misunderstanding, and to stop destroying the neutral space where that misunderstanding can be mended.
I'd love it if whenever politics comes up on HN, we started brainstorming ways to do that, instead of amplifying the us vs. them rhetoric that is too prevalent elsewhere.
The only way out is to fix that mutual misunderstanding, and to stop destroying the neutral space where that misunderstanding can be mended.
I'd love it if whenever politics comes up on HN, we started brainstorming ways to do that, instead of amplifying the us vs. them rhetoric that is too prevalent elsewhere.
I agree with the sentiment, but it's also not helpful to lay blame equally. It's pretty obvious that the Republican party and their peripherals (fox news, et al) have caused way more damage than the Democrats.
(Not to say that the problems in our society can be distributed fully between those two groups).
(Not to say that the problems in our society can be distributed fully between those two groups).
[deleted]
It's pretty obvious that the Republican party and their peripherals (fox news, et al) have caused way more damage than the Democrats.
Obvious to whom, and damage to whom? Even those are things we need to work to restore a common view on. Even if you're right (and w.r.t. Fox News it'd be hard to be wrong), based on those I know who vary from middle left to far right, apportioning partisan blame, and blame in general, is just not going to be a productive way to frame the path forward. Maybe we need to take a breather, ignore who said what and why, and just look at where we really are, where we think we're going, and what we (as people, not as groups or parties or labels) can mutually agree to do to improve where we're going, and to find more common ground where we disagree on the fundamentals.
There are far too many things for just a few of us in a single HN thread to solve, of course, and I suppose proposing that we "elites" "solve" them is one of the things that contributes to the coastal/inland left/right rift. But every time I feel compelled to comment on a political discussion on HN, I'm still going to try (and occasionally fail) to keep searching for a way out, rather than just adding to the volume of what already exists, and encourage everyone who reads this to do the same. We know there is pain, we know there are voices to be heard. Now we need to use that pain to come together instead of to break apart. If we can find ways to do this on HN, maybe we can spread that to all the other communities we are part of.
Obvious to whom, and damage to whom? Even those are things we need to work to restore a common view on. Even if you're right (and w.r.t. Fox News it'd be hard to be wrong), based on those I know who vary from middle left to far right, apportioning partisan blame, and blame in general, is just not going to be a productive way to frame the path forward. Maybe we need to take a breather, ignore who said what and why, and just look at where we really are, where we think we're going, and what we (as people, not as groups or parties or labels) can mutually agree to do to improve where we're going, and to find more common ground where we disagree on the fundamentals.
There are far too many things for just a few of us in a single HN thread to solve, of course, and I suppose proposing that we "elites" "solve" them is one of the things that contributes to the coastal/inland left/right rift. But every time I feel compelled to comment on a political discussion on HN, I'm still going to try (and occasionally fail) to keep searching for a way out, rather than just adding to the volume of what already exists, and encourage everyone who reads this to do the same. We know there is pain, we know there are voices to be heard. Now we need to use that pain to come together instead of to break apart. If we can find ways to do this on HN, maybe we can spread that to all the other communities we are part of.
Yea, tribal politics is so toxic and so incredibly entrenched in our government. There is no room for getting elected for someone who shuns parties in favor of saying that they decide for themselves on each and every issue and not what their tribe has already decided. I don't have the slightest clue about how to fight it or even make it slightly less bad.
minikites(1)
Both parties are bad because only bad parties can succeed in our bad system. Also because they're basically identical. They are ants contending over a postage stamp, on a continent of political possibility. The only thing we can expect them to do is what they've already been paid by lobbyists to do before. That's why CARES Act is more of the same, except worse, that we already saw in the 2008-9 "bailouts". The next time most Americans suffer some easily foreseeable disaster, we can be sure that billionaires will feast even more and regular people will be helped even less.
There's no logical reason to be fighting seven wars, having 5% of the world's population but 25% of its prisoners and 20% of its covid deaths... and 800 billionaires. Our polity is shit. We're not in a local maxima. Literally any possible change would be for the better. The system we have cannot be changed via the methods it allows, however. Juvenile pleas for understanding only prolong our misery.
There's no logical reason to be fighting seven wars, having 5% of the world's population but 25% of its prisoners and 20% of its covid deaths... and 800 billionaires. Our polity is shit. We're not in a local maxima. Literally any possible change would be for the better. The system we have cannot be changed via the methods it allows, however. Juvenile pleas for understanding only prolong our misery.
I agree with most of what you're saying. There's a huge space of possibilities that are completely invisible to the current system. But I disagree weakly with the second to last sentence, and strongly with the last sentence.
The system we have cannot be changed via the methods it allows, however.
Not all at once, that's for sure. But the right small changes early on can lead to very large changes later. Some of those are possible, like voting methods other than first-past-the-post or instant-runoff. Some of them are in the direct control of people who visit HN, like the nature of social networking algorithms, and the metrics chosen to optimize them.
Juvenile pleas for understanding only prolong our misery.
For what it's worth, when I was a teenager, I was far less interested in understanding or compromise. That was about two decades ago. It's only after living in many, many different places as an adult that I think that "understanding" is not only possible, but necessary. My perspective now is anything but juvenile.
When I'm saying we need to bridge the gap between left and right, I'm not saying we need to preserve the status quo exactly as it is. I'm saying that not doing so will practically guarantee that all sides end up worse than the status quo.
The system we have cannot be changed via the methods it allows, however.
Not all at once, that's for sure. But the right small changes early on can lead to very large changes later. Some of those are possible, like voting methods other than first-past-the-post or instant-runoff. Some of them are in the direct control of people who visit HN, like the nature of social networking algorithms, and the metrics chosen to optimize them.
Juvenile pleas for understanding only prolong our misery.
For what it's worth, when I was a teenager, I was far less interested in understanding or compromise. That was about two decades ago. It's only after living in many, many different places as an adult that I think that "understanding" is not only possible, but necessary. My perspective now is anything but juvenile.
When I'm saying we need to bridge the gap between left and right, I'm not saying we need to preserve the status quo exactly as it is. I'm saying that not doing so will practically guarantee that all sides end up worse than the status quo.
>When I'm saying we need to bridge the gap between left and right, I'm not saying we need to preserve the status quo exactly as it is.
The Democrats have been trying to bridge the gap for 30 years and the Republicans keep spitting in their face (Newt Gingrich in the 90s, the entire party vs Obama in the 00s). The Democrats seem to have finally figured this out and Republicans are now upset that it isn't working any more. Republicans aren't interested in bridging the gap because if they do, their base will find someone who's "a real fighter, not a RINO".
The Democrats have been trying to bridge the gap for 30 years and the Republicans keep spitting in their face (Newt Gingrich in the 90s, the entire party vs Obama in the 00s). The Democrats seem to have finally figured this out and Republicans are now upset that it isn't working any more. Republicans aren't interested in bridging the gap because if they do, their base will find someone who's "a real fighter, not a RINO".
We have about as much chance of changing politicians by talking about their parties as we do of changing the outcome of a sporting event by yelling harder for our favorite team at the (30-second-delayed) TV.
Maybe we should be more interested in what people can do, than what politicians can't.
Maybe we should be more interested in what people can do, than what politicians can't.
I thought our government was supposed to be "of the people" (also known as a democracy). Maybe we should expand access to voting (e.g. easier to register, no-excuse mail-in ballots, adding polling places, making election day a holiday, and/or extending voting days). We could also address gerrymandering and other structural issues (e.g. some system other than first-past-the-post).
Now think about which side wants to do this and which side wants to stop them.
Now think about which side wants to do this and which side wants to stop them.
Now think about which side wants to do this and which side wants to stop them.
And then? Instead of lumping people into "sides" like some seem to want us to do because they benefit from conflict, we can ask "Okay, the party can't be reasoned with, but what about the people?" I'm not denying there are politicians and pundits and whatnot who do everything they are accused of. I'm saying we can try to ignore them and focus on human connection with the people who follow them out of tradition but don't fully agree with them. Do you have any ideas for how to start doing that?
I don't normally read people's comment history. I read your past day or so of comments to see why we seem to be talking past one another. IMO the phrasing of some of your comments tends toward escalation rather than discussion. (Disclaimer: I don't represent HN itself in the slightest, nor are my views likely to be fully correlated with the HN mainstream)
And then? Instead of lumping people into "sides" like some seem to want us to do because they benefit from conflict, we can ask "Okay, the party can't be reasoned with, but what about the people?" I'm not denying there are politicians and pundits and whatnot who do everything they are accused of. I'm saying we can try to ignore them and focus on human connection with the people who follow them out of tradition but don't fully agree with them. Do you have any ideas for how to start doing that?
I don't normally read people's comment history. I read your past day or so of comments to see why we seem to be talking past one another. IMO the phrasing of some of your comments tends toward escalation rather than discussion. (Disclaimer: I don't represent HN itself in the slightest, nor are my views likely to be fully correlated with the HN mainstream)
>"Okay, the party can't be reasoned with, but what about the people?"
I addressed this earlier, the people can't be reasoned with either, that's what I meant when I said that reasonable GOP politicians get labeled as RINOs and then lose their primary race to the more extreme candidate. In fact, here's a very timely example. Ben Sasse was punished for doing exactly that: https://twitter.com/kylegriffin1/status/1357675346062057472
These voters have an outsized effect on government because of the electoral college and the fact that we give more votes to empty land instead of real Americans who happen to live in cities. If we had a fair voting system, these views would be much less mainstream and taken much less seriously. It sounds counter-intuitive but you have to force these people to "be reasonable" by taking away their power if they're not.
>the people who follow them out of tradition but don't fully agree with them.
I think a lot of the voters in this category have left the party, so most of the voters left are the unreasonable ones. Sometimes people can't be reasoned with and the only option left is to limit the damage they can cause.
I addressed this earlier, the people can't be reasoned with either, that's what I meant when I said that reasonable GOP politicians get labeled as RINOs and then lose their primary race to the more extreme candidate. In fact, here's a very timely example. Ben Sasse was punished for doing exactly that: https://twitter.com/kylegriffin1/status/1357675346062057472
These voters have an outsized effect on government because of the electoral college and the fact that we give more votes to empty land instead of real Americans who happen to live in cities. If we had a fair voting system, these views would be much less mainstream and taken much less seriously. It sounds counter-intuitive but you have to force these people to "be reasonable" by taking away their power if they're not.
>the people who follow them out of tradition but don't fully agree with them.
I think a lot of the voters in this category have left the party, so most of the voters left are the unreasonable ones. Sometimes people can't be reasoned with and the only option left is to limit the damage they can cause.
Changes for the better will necessarily be extreme. If that weren't the case, we would have found a way to accomplish them already. Your "conservative" aunt won't like the changes we need any more than your "liberal" uncle will. News media firms are owned by people who like and propagandize in favor of the current system. It isn't important that all Americans like each other. In our current situation, 95% of Americans share certain interests even though they are culturally opposed. They could work together without liking each other.
After annoying powerful interests for decades, Martin Luther King Jr. finally tried to unite poor blacks with poor whites, not because they liked each other but because they shared common interests. He was assassinated within five months. TPTB can abide less racism, but not more class solidarity.
After annoying powerful interests for decades, Martin Luther King Jr. finally tried to unite poor blacks with poor whites, not because they liked each other but because they shared common interests. He was assassinated within five months. TPTB can abide less racism, but not more class solidarity.
> Changes for the better will necessarily be extreme.
It’s long been my loosely held belief that _extreme_ change to a political system will _necessarily_ harm the average citizen. I think history has shown that to be true fairly consistently.
It’s long been my loosely held belief that _extreme_ change to a political system will _necessarily_ harm the average citizen. I think history has shown that to be true fairly consistently.
sometimes the short term harm inflicted on a few is worth the benefits it will bring society in the long term
"Our shudders are all for the “horrors” of the minor Terror, the momentary Terror, so to speak; whereas, what is the horror of swift death by the axe, compared with lifelong death from hunger, cold, insult, cruelty, and heart-break?"
"Our shudders are all for the “horrors” of the minor Terror, the momentary Terror, so to speak; whereas, what is the horror of swift death by the axe, compared with lifelong death from hunger, cold, insult, cruelty, and heart-break?"
But who among us has the moral authority to claim which harm is okay on which few? I remain convinced that the path to sustainable progress does not lie in the direction of extremes. Push too hard too fast, and you both amplify your opposition, and risk pushing in the wrong direction.
But the great thing is we can all disagree on that, and still agree to work together where we can.
But the great thing is we can all disagree on that, and still agree to work together where we can.
We are constantly gaslit by the war media, so there is a difference between perception and reality. It would not be extreme in any real sense to stop fighting all or even some of our stupid murderous wars. It wouldn't be difficult; we could just... stop. Yet every time there is a suggestion to stop antagonizing Russia or China, or stop attempting to depose every Latin American leader who isn't a right-wing hardliner, or relax the economic sanctions imposed on a third of humanity, or just accept that Near Eastern nations are going to build the pipelines they choose to build where they choose to build them, we are subjected to intense campaigns of sky-is-falling fear-the-brown-people bullshit.
It would not be extreme in any real sense to give labor unions more power, or to imprison fewer people, or to end drug prohibition, or to stop brutalizing undocumented immigrants, or to have less racism enforced by our bureaucracies, or to reign in abusive social media firms, or to provide adequate health care to everyone. All of these things have already been done in particular states and municipalities. Large numbers of Americans already support these things. Even so, armies of Chickens Little lie in wait to assail those who reasonably suggest further improvements.
We got in this position by gradual "sustainable" steps. Shit runs downhill. If everything continues to change in the way it has changed already, in ten years we'll be even further downhill. The 1960s' civil rights movement wasn't gradual accommodation. Old white people were angered all over the nation. That's why it led to genuine improvements. As Lenin said, one must always try to be as radical as reality itself.
It would not be extreme in any real sense to give labor unions more power, or to imprison fewer people, or to end drug prohibition, or to stop brutalizing undocumented immigrants, or to have less racism enforced by our bureaucracies, or to reign in abusive social media firms, or to provide adequate health care to everyone. All of these things have already been done in particular states and municipalities. Large numbers of Americans already support these things. Even so, armies of Chickens Little lie in wait to assail those who reasonably suggest further improvements.
We got in this position by gradual "sustainable" steps. Shit runs downhill. If everything continues to change in the way it has changed already, in ten years we'll be even further downhill. The 1960s' civil rights movement wasn't gradual accommodation. Old white people were angered all over the nation. That's why it led to genuine improvements. As Lenin said, one must always try to be as radical as reality itself.
> Changes for the better will necessarily be extreme.
The aptly named "First Steps Act" smells a "No True Changes" fallacy here. :)
The aptly named "First Steps Act" smells a "No True Changes" fallacy here. :)
democrats always seem to fold because the right has moneyed interests on their side, politicians will never act in our interests unless we make the cost of not doing so greater than the cost of helping us
The planet was destroyed, but for a short time we made a lot of money for a few rich people
At least be upfront about what this is: preferring the justice system to fall apart.
So let's allow all big companies to do whatever the fuck they want, because otherwise "our economy would fall apart"? This is the darkest comment I read on HN.
This is a common exaggeration used in a variety of ways. A Basic Income will destroy the economy (because the US economy depends utterly on a slave-labor class?) Or electric cars will destroy the economy because whatever. Its thrown around here a lot.
I read it as a lament that our economies are so vulnerable to the actions of a relatively small number of large corporations. Including the idea of certain entities purportedly being 'too big to fail'.
Not sure if that was the intended connotation though.
Not sure if that was the intended connotation though.
[deleted]
or maybe it means an alternative way of organizing society is needed
Yes, as soon as you put a price on malfeasance, it becomes a spreadsheet decision for a corporation.
$573M for 450,000 overdose deaths. $1k+ per death.
Do you think this amount is high or low?
Can't speak for tkinom, but if you were friends with a thousand or two of those dollars, then you feel a punch in the gut. It's not so much "low" as it is "sad."
It’s too low. The 20 people most responsible for willfully creating this epidemic should get lethal injection, the next 200 should get life in prison without parole. Then some measure of justice will be served, fines or no fines.
Justice was not done in the case of Purdue. The Sackler family absconded with billions. They still need to be held to account.
Here's a fascinating article about the Sackler family and how deluded they are about the whole thing https://www.newyorker.com/news/our-columnists/the-sackler-fa...
It does seem a rather gaping hole in our legal/finance system that it's possible for a company to do a risky thing where the upside will occur soon, yet the downside will be delayed many years. Then the shareholders of the company can take out all the profits of the upside, walk away with all the cash and declare the company bankrupt when the downside happens.
I think the only proper fix would be to disallow companies from going bankrupt - ie. if a company has unpaid debts, the shareholders must pay them, and the share price can become negative. That forces everyone to build such risks into their models from the start, and company directors will be discouraged from taking such risky bets.
Other similar financial instruments exist - like stock shorts, futures contracts, lloyds names, etc.
I think the only proper fix would be to disallow companies from going bankrupt - ie. if a company has unpaid debts, the shareholders must pay them, and the share price can become negative. That forces everyone to build such risks into their models from the start, and company directors will be discouraged from taking such risky bets.
Other similar financial instruments exist - like stock shorts, futures contracts, lloyds names, etc.
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This doesn't make any sense. If the investors got money on the upside, they must've taken their investments out before the bankruptcy.
Then if the remaining investors pay the debts, they've also lost all the money they invested.
Where do you draw the line for investors responsible? Anyone who's still in? Whoever was ever in?
Then if the remaining investors pay the debts, they've also lost all the money they invested.
Where do you draw the line for investors responsible? Anyone who's still in? Whoever was ever in?
It's a bit like taking over someone's lease for a house mid way through...
If there is damage when you take it over, you better ask the person you're taking over the lease from to pay for it, cos else it's gonna be blamed on you and you'll have to pay for it...
The same translates to buying shares with my proposal - you better inspect what you're taking on, because there might be costs associated.
If there is damage when you take it over, you better ask the person you're taking over the lease from to pay for it, cos else it's gonna be blamed on you and you'll have to pay for it...
The same translates to buying shares with my proposal - you better inspect what you're taking on, because there might be costs associated.
This proposal seems to encourage "pump-and-dump" schemes to an even greater extent. Whoever gets left holding the bag will end up with shares worth negative dollars?
We saw last week how bad it is to hold excessively large short positions. This proposal would effectively make long positions have unlimited downside risk as well. I think it would have extremely deleterious effects on investment and the bad actors would still find ways to avoid the downside by leaving other shareholders holding "the bag."
We saw last week how bad it is to hold excessively large short positions. This proposal would effectively make long positions have unlimited downside risk as well. I think it would have extremely deleterious effects on investment and the bad actors would still find ways to avoid the downside by leaving other shareholders holding "the bag."
At that point you're taking away the defining characteristic of a corporation and essentially forcing people to organise as partnerships instead.
(Not an argument, just an observation)
(Not an argument, just an observation)
From the New York Times article, "The amount McKinsey is paying is substantially more than it earned from opioid-related work with Purdue or Johnson & Johnson, Endo International and Mallinckrodt Pharmaceuticals, its other opioid-maker clients, a person involved in the settlement negotiations said"
To me, "a cost of doing business" implies that they're making more money than it costs them. Here at least, that doesn't seem to be the case. So while this may not have been sufficient for retribution, I think it's easy to make the case that this will be a pretty good deterrent.
Consulting companies will start to realize that they can be liable for the advice the give.
https://www.nytimes.com/2021/02/03/business/mckinsey-opioids...
To me, "a cost of doing business" implies that they're making more money than it costs them. Here at least, that doesn't seem to be the case. So while this may not have been sufficient for retribution, I think it's easy to make the case that this will be a pretty good deterrent.
Consulting companies will start to realize that they can be liable for the advice the give.
https://www.nytimes.com/2021/02/03/business/mckinsey-opioids...
The money they make is the total of all the money they make from shady immoral shit. The opioid project wasn't the only shady project contributing to their top line.
The EV is the payoff times the probability. If there were only a 10% chance of paying (for example) treble damages without admitting guilt, then a company would take that bet repeatedly and the wins would more than pay for the losses.
Posted this a few times but it keeps getting brought up. A project like this would be ~$1M. The fine is ~$600M. Total McK revenue is ~$10,000M.
It's wayyyy more than the cost of doing business. This project represents less than 0.001% of a year's revenue. Company is losing 5-6%.
It's wayyyy more than the cost of doing business. This project represents less than 0.001% of a year's revenue. Company is losing 5-6%.
> Most of the money will go to government programs fighting opioid addiction and providing treatment, North Carolina Attorney General Josh Stein said Thursday. The company helped “turbocharge” opioid sales for 15 years while consulting for Purdue and its billionaire owners, the Sackler family, Stein said.
15 years of work must have cost more than $1M
https://www.aljazeera.com/economy/2021/2/4/mckinseytopay-573...
15 years of work must have cost more than $1M
https://www.aljazeera.com/economy/2021/2/4/mckinseytopay-573...
Look at all the scumbag things McKinsey has done without paying any settlement. If there is a 10% risk of getting caught, from a decision calculus perspective this is a $57m fine.
Wait. You want to destroy a $10B+ annual revenue business that does consulting across almost every industry because of this one project?
Edit: to the reply comparing this to murder, not it's not. And even if you do compare it, the court look at an individuals standing and contribution to the community all the time in sentencing.
Edit: to the reply comparing this to murder, not it's not. And even if you do compare it, the court look at an individuals standing and contribution to the community all the time in sentencing.
McKinsey is one of the most sociopathic corporate entities in the world and this has been proven time and time again.
The government spends so much energy preventing monopolies that they don't want to be responsible for creating them.
I'm serious, this guides decisions with Attorney Generals.
I'm serious, this guides decisions with Attorney Generals.
[deleted]
How much was McKinsey paid by Purdue? I haven't been able to find the quantum anywhere.
Heh. Sure ... really? How high were the health costs of that crises and how high were their profits during that period?
Aaaah. What a world...
Aaaah. What a world...
Why aren't these people in jail?
Sadly, I believe the money that will go to the states will help finance the incarceration of those very opioid users.
[deleted]
so $573M settlement for 450000 overdoses. So they value life at $1275. The Sackler family is worth $13b. Ridiculous.
copypasta from an answer to a similar comment above:
I am not defending what the firm did but we are talking about a study that took place in 2017, it has nothing to do with what happened before and certainly doesn't account for all deaths after 2017 either.
I am not defending what the firm did but we are talking about a study that took place in 2017, it has nothing to do with what happened before and certainly doesn't account for all deaths after 2017 either.
>So they value life at $1275.
McKinsey bears some responsiblity but not all of it; nobody forced people to take those opiates, the addicts also bear some responsiblity. The idea in modern society that people have zero responsibility for their own actions is part of why we're in this mess to begin with, because people with that attitude aren't going to work hard to take responsibility for their own health and wellbeing. I'd bet at least half the people here complaining about McKinsey's behaviour are the same people who'd argue that people should just trust their doctor and do whatever the doctor suggests, and refuse to accept that often what's financially in the doctor's best interests is not in the best interests of the patient's health.
McKinsey bears some responsiblity but not all of it; nobody forced people to take those opiates, the addicts also bear some responsiblity. The idea in modern society that people have zero responsibility for their own actions is part of why we're in this mess to begin with, because people with that attitude aren't going to work hard to take responsibility for their own health and wellbeing. I'd bet at least half the people here complaining about McKinsey's behaviour are the same people who'd argue that people should just trust their doctor and do whatever the doctor suggests, and refuse to accept that often what's financially in the doctor's best interests is not in the best interests of the patient's health.
Responsibility doesn’t sum to 100%. If I fly on a crappy airline and get in a plane crash, it was partly my fault, and also the fault of pilots, maintenance people, regulators, executives, and many more. If someone makes a box with a hole in it labeled “free prize inside” which chops off your fingers, it’s mostly their fault. If everyone knows that opiates are addictive, and a pharmaceutical company says they figured out how to make non-addictive ones, and gets regulator approval, and convinces doctors to prescribe their new drug, and to tell patients it is not addictive, then I think lack of personal responsibility is only one small part of the problem.
> U.S. government data resulted in 450,000 overdose deaths from 1999 to 2018
They're paying just over $1,000 per life. According to the U.S. government a human life is worth $10,000,000. Seems totally fair.
https://www.npr.org/2020/04/15/835571843/episode-991-lives-v...
They're paying just over $1,000 per life. According to the U.S. government a human life is worth $10,000,000. Seems totally fair.
https://www.npr.org/2020/04/15/835571843/episode-991-lives-v...
McKinsey would think it is a badge of honor because it means they were competent and their advice made difference significant enough from pure BUSINESS point of view.
And not a single director goes to jail. Not even for a weekend.
McKinsey employee here. There's a lot of things that I think are quite disfunctional at the firm, but most of the criticism I read in the comments seems to me to be pretty wide of the mark and to be rooted in both an understandable indignation and an ignorance of the many realities of the firm.
I share the anger and I would probably point it at the firm too it if I didn't work there and know things from the inside. There is real anger (and a sense of betrayal) inside the firm against the partners responsible for this, as there was over the collaboration with ICE or the South African corruption scandal. Not anger because they put the firm in jeopardy but because what they did was wrong and went against the firm's values. Thankfully they have been terminated.
Some will say I am a mouthpiece for the firm on a PR rampage and I have no way to prove them wrong but I still feel I have to try and provide a bit of perspective from the inside. More of that can be found in my fellow firm member klmadfejno's comments to which I subscribe 100%.
It doesn't help that very little of what happens in the inside is visible publicly. It does not stem from a conspiracy to do evil things secretly but is considered necessary mainly because:
This means that a lot of shitty things can happen (think advising ICE, the South Africa corruption scandal, Enron or the current Purdue situation).
The leadership has nothing to do with initiating or managing engagements and doesn't have the kind of executive power that you find in a traditional company. However they do have a role in setting the rules regulating how this takes place.
To avoid shit happening engagements must be approved by several committees and it's part of the responsibilities of the leadership to ensure that the policies that these committees enforce are in agreement with the firm's values.
The current leadership has recognized in the last couple of years that these policies were not strict enough and has worked hard to strengthen them (that's my opinion, not fact). It now is not possible to start an engagement that would derive into harm against society, the environment, human rights etc...
An engagement as the Purdue one (dating back to 2017) would not be possible now, nor can we serve tobacco companies, arms manufacturers or start an engagement that would help create new fossile fuel extraction capacity.
To quote the firm's Managing Partner:
"As you know, we have made fundamental changes to our professional standards, policies, risk management and culture over the past two years. These changes include:
▪ Adopting a new Client Service Policy in 2019 that would have stopped us from doing this work on multiple grounds as the epidemic unfolded. It is also what led us to cease all opioid-specific work anywhere in the world.
▪ Introducing a new code of conduct that leaves no room for doubt as to the conduct that is expected of every colleague. We said we would have no tolerance for those who violate our professional standards. In this case, after a thorough investigation, two partners have been terminated for violating our Firm’s professional standards.
▪ Adopting a purpose statement after a year of debate and dialogue and using this to inform the decisions that we make.
But we need to go further. And we will. We must use this moment to bring further energy to the discussions we have around our values and, critically, to the actions we all take to ensure they are delivered without fail every day, everywhere "
(https://www.mckinseyopioidfacts.com/wp-content/uploads/2021/...)
This means that a hard-left guy like me can work at McKinsey and be very proud of what he does and look at his children in the eye. While policies I am dead against are promoted somewhere else at the firm, as a firm member I can (and do) choose to work on projects that promote policies that I agree with.
The important part is that the control mechanisms that were too weak keep being strengthened as I think the current leadership is doing, but I am looking hard and will keep doing so and hold them accountable, as a lot of my colleagues are. I'd say most but that would be anecdata.
Regarding consultancy value, I can only provide more anecdata. There is a strong culture to overdeliver and bring more to the table than what the client paid for. The young consultant I have seen discussed across the comments is never left alone and is part of a team with experienced subject-matter experts. McKinsey recruits lots of seasoned experts and brilliant minds with amazing skills and working with them is the main part of what makes working at the firm so amazing (along with the challenging problems we are allowed to take a stab at solving).
I have definitely come across buzzword-wielding, smooth-talking McKinsey consultants bullshitting their way through an engagement and delivering little value but in my experience it is not the rule. I cannot discuss what I do but I can say we are very much encouraged to go above and beyond, to share all the knowledge we have and have often seen wizened, experienced, no-bullshit-taking and distrustful engineers ending up genuinely amazed with the new insight and actionable knowledge we have shared with them (and of course we learn a lot in the bargain too)
I share the anger and I would probably point it at the firm too it if I didn't work there and know things from the inside. There is real anger (and a sense of betrayal) inside the firm against the partners responsible for this, as there was over the collaboration with ICE or the South African corruption scandal. Not anger because they put the firm in jeopardy but because what they did was wrong and went against the firm's values. Thankfully they have been terminated.
Some will say I am a mouthpiece for the firm on a PR rampage and I have no way to prove them wrong but I still feel I have to try and provide a bit of perspective from the inside. More of that can be found in my fellow firm member klmadfejno's comments to which I subscribe 100%.
It doesn't help that very little of what happens in the inside is visible publicly. It does not stem from a conspiracy to do evil things secretly but is considered necessary mainly because:
1. the firm serves competing companies and handles sensitive information (think strategic commercial and financial information, not conspiracy to feed on innocent newborns. Even internally we are not allowed to discuss a lot of what other teams do or only a very sanitized version)
2. the firm advises and clients must decide whether they follow that advice or not (they often don't) and not be able to shield themselves behind someone else (particularly when the client is a government) for the decisions they eventually take.
This means that a lot of shitty things can happen (think advising ICE, the South Africa corruption scandal, Enron or the current Purdue situation).
The leadership has nothing to do with initiating or managing engagements and doesn't have the kind of executive power that you find in a traditional company. However they do have a role in setting the rules regulating how this takes place.
To avoid shit happening engagements must be approved by several committees and it's part of the responsibilities of the leadership to ensure that the policies that these committees enforce are in agreement with the firm's values.
The current leadership has recognized in the last couple of years that these policies were not strict enough and has worked hard to strengthen them (that's my opinion, not fact). It now is not possible to start an engagement that would derive into harm against society, the environment, human rights etc...
An engagement as the Purdue one (dating back to 2017) would not be possible now, nor can we serve tobacco companies, arms manufacturers or start an engagement that would help create new fossile fuel extraction capacity.
To quote the firm's Managing Partner:
"As you know, we have made fundamental changes to our professional standards, policies, risk management and culture over the past two years. These changes include:
▪ Adopting a new Client Service Policy in 2019 that would have stopped us from doing this work on multiple grounds as the epidemic unfolded. It is also what led us to cease all opioid-specific work anywhere in the world.
▪ Introducing a new code of conduct that leaves no room for doubt as to the conduct that is expected of every colleague. We said we would have no tolerance for those who violate our professional standards. In this case, after a thorough investigation, two partners have been terminated for violating our Firm’s professional standards.
▪ Adopting a purpose statement after a year of debate and dialogue and using this to inform the decisions that we make.
But we need to go further. And we will. We must use this moment to bring further energy to the discussions we have around our values and, critically, to the actions we all take to ensure they are delivered without fail every day, everywhere "
(https://www.mckinseyopioidfacts.com/wp-content/uploads/2021/...)
This means that a hard-left guy like me can work at McKinsey and be very proud of what he does and look at his children in the eye. While policies I am dead against are promoted somewhere else at the firm, as a firm member I can (and do) choose to work on projects that promote policies that I agree with.
The important part is that the control mechanisms that were too weak keep being strengthened as I think the current leadership is doing, but I am looking hard and will keep doing so and hold them accountable, as a lot of my colleagues are. I'd say most but that would be anecdata.
Regarding consultancy value, I can only provide more anecdata. There is a strong culture to overdeliver and bring more to the table than what the client paid for. The young consultant I have seen discussed across the comments is never left alone and is part of a team with experienced subject-matter experts. McKinsey recruits lots of seasoned experts and brilliant minds with amazing skills and working with them is the main part of what makes working at the firm so amazing (along with the challenging problems we are allowed to take a stab at solving).
I have definitely come across buzzword-wielding, smooth-talking McKinsey consultants bullshitting their way through an engagement and delivering little value but in my experience it is not the rule. I cannot discuss what I do but I can say we are very much encouraged to go above and beyond, to share all the knowledge we have and have often seen wizened, experienced, no-bullshit-taking and distrustful engineers ending up genuinely amazed with the new insight and actionable knowledge we have shared with them (and of course we learn a lot in the bargain too)