Unpacking McKinsey: What’s Going on Inside the Black Box?
The opinions and views expressed in this article are solely my own and do not reflect the views, beliefs, or positions of McKinsey & Company. When quoting from this article, please ensure the statement's content is not altered or misrepresented. Quoting should not distort the original intent.
It’s been a rough couple of years for McKinsey & Company. There are dozens of articles and a bestselling book detailing the firm’s role in the opioid crisis and other scandals. In case you missed those, John Oliver produced a segment this week. Hint: it’s not flattering.
I spent 13 years at McKinsey before retiring as a partner last year. Since leaving, family and friends have asked if the firm is as terrible as the media portray it. Is that why I left? In a word, “no.”
My thoughts about McKinsey are complicated. I enjoyed my time there, but, like any company, it’s imperfect. The media criticism is valid.
That said, the analysis from the media about why McKinsey fails to live up to its stated values is inconsistent with my experience. The company’s secrecy is as much to blame as the media’s desire to stoke anger and resentment. However, the result is the same. Outsiders understand McKinsey’s behaviors but struggle to articulate why they occur.
This article is not a defense of McKinsey. It’s a peek behind the curtain for those seeking to understand how the institution works and its current predicament. I don’t speak on behalf of McKinsey, and my former colleagues may disagree with my diagnosis. That’s okay. I didn’t write this article for them. I wrote it for me.
Choosing Partnership
The first thing to know about McKinsey is that it’s a corporation governed as a partnership. Nearly all consultancies have “partners,” but most are governed as corporations. This may seem like an esoteric detour into legal structures, but it’s not.
A corporation has a management team that oversees strategy and operations. On paper, it may seem like McKinsey has a similar structure. There is a Managing Partner who looks like a CEO and a Shareholders Council that looks like an executive team. In practice, that’s not how McKinsey works.
McKinsey operates as a collection of partners sharing a brand identity and resources. I was one of thousands of partners. I didn’t work for anybody, and nobody worked for me. I led teams during engagements and as part of my practice responsibilities, but those people did not report to me. Even the CFO of McKinsey is a senior partner who serves clients like any other partner. The firm doesn’t have a management team or reporting relationships in the same way as a corporation.
The benefit of the partnership model is that it fosters a sense of ownership, independence, and innovation that is difficult to replicate in a corporate structure. For example, an industrial client asked for help building an AI and automation program. The company was heavily involved in politics in a way that didn’t sit right with me. I refused to serve them. Another partner agreed to do the work.
The same system that allowed me to say “no” allowed the other partner to say “yes.” McKinsey recently established guidelines to avoid controversial clients (e.g., cigarette manufacturers), but most decisions are delegated to individuals. From senior partners to analysts, many people have refused to serve clients based on their personal values.
The level of trust McKinsey places in its partners is unique. I started an automation service line in 2016. I didn’t have to ask for permission. I only needed to find sponsors and early-tenure colleagues who shared my passion for automation.
Unfortunately, partners sometimes violate the trust placed in them. The decision to serve Purdue Pharma is the latest example, but it’s hardly the first and won’t be the last.
McKinsey partners typically learn about these violations around the same time as the public. I trusted my fellow partners to choose which clients to serve and which topics to serve them on. That trust was well-placed most of the time. When it wasn’t, the results could be catastrophic.
Again, this is not a defense of McKinsey. The “few bad apples” argument provides no solace to those suffering from the opioid epidemic. Neither does pointing to the company’s support of governments and healthcare providers during the COVID-19 pandemic. Positive contributions do not excuse reprehensible behavior.
My point is that running McKinsey as a partnership comes at the expense of accountability and control. There are many versions of Harlon’s Razor, but the version most applicable to McKinsey is this one:
Never attribute to malice that which can be adequately explained by neglect
McKinsey is not an evil empire. It’s not an empire at all. It’s a partnership built on trust that is increasingly strained under the weight of growth.
Bigger, Not Better
When I was up for partner election, a senior partner told me that the committee was trying to answer one question — will electing this person make the partnership better or only bigger? His point was that McKinsey prioritizes new capabilities ahead of growth.
That attitude has changed in recent years. McKinsey’s focus has gradually shifted from innovation to serving clients “at scale.” On the surface, the shift makes sense. McKinsey serves the most prominent public, private, and social sector institutions. To affect change in large organizations, you need to operate at scale.
McKinsey has grown from around 10,000 people when I joined to more than 45,000 people today. Let’s set aside the challenge of operating a partnership at that scale. Rapid growth has other consequences.
First, McKinsey can no longer be as picky as it used to be about its clients. It serves everybody. Name any company on the Fortune 500 list, and chances are they are (or were) a McKinsey client.
Second, growth changes the nature of the work you do. Most people know McKinsey as a strategy firm. That hasn’t been true for years. Most clients only need strategy help every couple of years. That’s not enough to sustain a 45,000-person consultancy.
In recent years, McKinsey has diversified its client service. Most of the work today relates to operations (e.g., procurement), digital, and other “enterprise programs.” Partners chase multi-year, multi-team opportunities ostensibly to generate impact at scale. In reality, enterprise programs are the only way to keep thousands of consultants busy.
The net result is that McKinsey is more of an agenda-taker than an agenda-setter at many clients. Partners can’t afford to walk away from clients and engagements as they did in the past. McKinsey chases every opportunity — consultancies decay when they don’t create client-facing opportunities for skill and knowledge development.
Finally, McKinsey’s rapid growth has led to fragmentation. Consultants are more specialized, and integrating their expertise is a challenge. Partners are often spread thinly across multiple clients, desperately trying to keep the wheels on the bus. This fragmentation makes it nearly impossible to step back and consider questions like, “Should I be serving this client on this topic?”
I can’t pinpoint when McKinsey shifted from a focus on innovation to a focus on growth. It doesn’t seem to be a conscious pivot. Instead, I see a firm intent on making a lasting, positive impact on prominent institutions without adequately considering how rapid growth might change McKinsey.
Positive Intent
Most people inside McKinsey care about the same issues as those outside. The narrative that McKinsey attracts out-of-touch, self-absorbed students from Ivy League institutions isn’t backed up by who works there.
One benefit of rapid growth is increased diversity. McKinsey can no longer afford to hire only MBA students from Ivy League institutions. Scroll LinkedIn for a few minutes, and you’ll find McKinsey employees with virtually any background you can imagine. I’ve worked with a former NFL player, Navy pilot, ER doctor, and circus performer. All were incredible consultants with unique skills and perspectives.
The diversity I’m describing hasn’t reached the partner level. It takes years to progress from associate to senior partner. Over time, the partnership should catch up with the rest of the firm. Could the election timeline be accelerated? Of course. However, any interventions (e.g., faster promotion paths, external partner hires) have their consequences.
I say this to rebuke the “us vs. them” framing of many critiques. The people inside McKinsey care about the world. They’re not the selfish, money-hungry elites you read about in the news. Those people exist, but that’s true everywhere you look.
Intent is at the heart of reconciling my internal view of McKinsey with the external view painted by the media. Observed behaviors may be the same, but intent matters. I won’t defend McKinsey’s behaviors, but I will defend its intent.
The organization is indeed secretive. You won’t see McKinsey consultants walking around with branded backpacks. The company doesn’t publish its client list. You wouldn’t even notice a McKinsey office if you walked by one on the street.
The origins of this secrecy lie in how the firm thinks about its relationships with clients. McKinsey wants clients to receive credit for its work. The entire client service model is designed around coaching and developing clients, not doing the work for them. A typical McKinsey team is only a handful of people.
Other reasons exist for secrecy, including McKinsey’s policy of serving competitors. The organization has a long history of managing these conflicts and takes confidentiality seriously. That said, McKinsey’s secrecy is rooted in its client service philosophy rather than the desire to obfuscate conflicts.
McKinsey is also criticized for pursuing profit over doing what’s right. If anything, it is less susceptible than most to this bias. I was not measured on revenue or profit, even as a partner. I can’t speak for senior partners, but I had zero financial targets.
If McKinsey is full of well-meaning people free from the stress of quarterly targets, how does it end up embroiled in scandals? Shouldn’t that create the optimal conditions for doing good in the world? It’s not that simple.
Almost any project can be framed positively or negatively. Here are three hypothetical headlines written about projects I worked on, framed from the perspective of McKinsey and its clients:
- McKinsey helps a struggling retailer reinvent its business, saving jobs and ushering the company into the digital era
- McKinsey helps a generic pharmaceutical manufacturer open a new plant, driving down prices of life-saving drugs
- McKinsey helps a healthcare company automate its hiring process, filling thousands of critical vacancies
Sounds pretty good, right? Now, here are three hypothetical headlines about the SAME projects written from a critical point of view:
- McKinsey helps a multi-billion dollar retailer cut thousands of jobs, decimating local economies and straining public services
- McKinsey helps a pharmaceutical company ship thousands of jobs overseas, further hollowing out the American middle class
- Will your next interview be with a machine? If McKinsey has its way, that’s where we’re headed
I could have done this with any projects I worked on. There are certainly situations like the work on opioids that are indefensible. However, in most cases, the nature of McKinsey’s work depends on who is telling the story.
If you believe in McKinsey’s positive intent, most of its work is a net positive for society. However, if you’re convinced of the company’s malice, you’ll easily find evidence to bolster that view.
Finally, there’s the question of why McKinsey isn’t doing more to tackle societal problems. For one, few organizations working on these problems have the money to hire McKinsey. It’s not that partners are turning away opportunities to do good. It’s simply that many clients don’t bother to ask for help once they learn about the cost of a McKinsey team.
The more significant issue is that public and social sector work exposes McKinsey to elevated risk. If you fail to solve a corporate problem, only the client cares. If you fail to solve a social problem, everybody cares. You need only look at the work on Rikers Island to see what can go wrong.
There is a vocal minority at McKinsey who advocate for exiting the public and social sectors entirely. Why pursue low-margin projects that expose you to massive liability? If you want evidence of positive intent, remember that McKinsey did its COVID-19 work shortly after the Rikers Island story broke. That was a terrible business decision but the right thing to do.
Can McKinsey partners be idealistic and naïve? Yes. Do they sometimes screw up when the stakes are high? Yes. Do they often fail to consider the unintended consequences of their work? Also, yes. Are they selfish, money-hungry elites who want to watch the world burn? Not in my experience.
This section is already too long, but let me end it with one last example of positive intent — my own. I took a 75% pay cut to join McKinsey. I was doing well in private equity but wanted to join an organization that cared about more than making money. I stayed for 13 years. McKinsey is not perfect, but it’s full of well-meaning people.
Reflections
McKinsey faces difficult decisions. Should it continue as a partnership or follow the lead of others and govern as a corporation? Should it keep growing, or was life better when the organization was less complicated? Is it worth serving public and social sector clients even when the risks could bring down the entire firm?
These questions must be answered in the context of a broader disruption of the consulting industry. Clients are demanding more functional and technical expertise. Digital assets like machine learning algorithms are becoming more valuable than intellectual property codified in PowerPoint decks. I talk about the future of consulting in my book, Artificially Human. I won’t repeat the details here, but the future consultancy I describe looks quite different than McKinsey today.
McKinsey is a reflection of society. It is an amalgamation of the challenges facing our institutions. Should consumer packaged goods companies be liable for the negative health impact of their products on society? Should we work to change authoritarian regimes from the inside or further isolate them?
These are difficult questions that don’t have simple answers. If you think there’s only one reasonable position on these issues, you either don’t understand them or are so entrenched in your thinking that you’re part of the problem, not the solution.
McKinsey can’t escape controversy. It’s baked into the business model. My advice to my former colleagues is to work through your challenges in public. Not everybody will agree with your actions, but at least they’ll better understand your intent.
