The (Real) Dark Side Of Management Consulting
The secrecy of the industry make it a prime target for attacks, but the real problems with the industry are more subtle and perhaps harder to solve
Pete Buttegieg’s experience at McKinsey & Company has been a hot-button issue in the 2020 democratic primaries. Similar to the attacks on Mitt Romney working at Bain Capital in the 2012 election, the criticisms of McKinsey are that it is an institution that participates in work that many see as fundamentally bad through its recommendations and controversial engagements with domestic and foreign governments.
I don’t have an ultimate stand on whether or not the strategy consulting industry is good for the world, but because it is an industry shrouded with secrecy it seems to be the target of an unusual amount of attacks bordering on conspiracy theories.
I don’t wish to explore where those attacks are coming from or why they seem to be overly focused on one firm, McKinsey & Company. What I want to do instead is explore what I see as the real “dark side” of strategy consulting — more subtle and deeper issues that are fundamentally not solvable and are the shadow side of the ultimate success of the industry.
Growing up, I had never heard of the consulting industry nor had I ever met anyone who had worked at these elite institutions. Due to the combination of good luck and the delusional optimism of youth, I ended up landing a job at McKinsey early in my career and stayed within the industry for almost ten years.
While I tend agree with Ezra Klein that there are probably better options for many of the typical people that McKinsey recruits, I experienced my shift into this industry, someone from a “non-target” school, as a dramatic step up in terms of skill development and opportunities available to me, many I didn’t know existed before joining.
I always experienced my time within the industry, especially at McKinsey and Boston Consulting Group, as an outsider simultaneously amazed that this world existed at all and wishing more people had the opportunity to work at these firms while also being shocked at some of the blatant blind spots within the industry.
There are four clear blind spots that make up the “dark side” of the strategy consulting industry.
- Diversity is embraced, as long as you went to an elite University
- Faith in a simple model of top-down change in modern institutions
- A belief that the scale of “impact” matters more than what you are doing
- Work is thought to the be the prime aim of life
#1 Diversity Is Embraced, As Long As You Went To An Elite University
If you walked into an office of one of the top consulting firms, you would be shocked at the cultural diversity. You would likely meet people from all over the world and from different ethnic backgrounds.
But that diversity is within a narrow context. Almost every person has some tie to an elite university from around the world.
A quick LinkedIn search shows that over 1,400 people or almost 5% of current McKinsey employees went to one of Harvard’s several schools and over 15% of current employees, or 4200+ people are from one of five schools: Harvard, Penn, Stanford, London School of Economics or INSEAD. As a comparison, the total number of people that have some affiliation with the #11–30 ranked public schools in the US barely cracks 1,000 people (and many of them only made it into McKinsey after attending elite graduates schools).
The front-line consultants are almost exclusively from these types of schools whereas the administrative and functional employees tend to be from schools nearby the offices and less connected to top ranked schools. Meaning even once you are inside these organization, you still likely won’t have access to the best jobs unless you went to the right schools.
There is nothing inherently wrong with people from elite schools and in fact most of these people were wildly impressive. but this brings us to our first blind spot:
Blind Spot #1: An elite degree is the best proxy for talent and wisdom.
This mindset narrows the view on the type of people who get access to work at elite consulting firms and ultimately, who gets to succeed in society.
I joined McKinsey from a “non-target” school early in my career and the biggest challenge for me wasn’t the work but learning how to embrace the beliefs and mindsets of people that had spent their entire lives operating within elite worlds.
#2 Faith in a simple model of top-down change in modern institutions
The clients of top consulting firms are senior executives, CEOs and Board members. These senior leaders, if not ex-consultants themselves, believe in a model of change that revolves around themselves as leaders that are able to design, implement and deliver changes that lead to positive outcomes.
One could say that the job of a senior leader in today’s modern organization is to constantly show progress, which used to be a simple equation looking at decreasing costs and increasing revenues, but now includes more creative options like stock buybacks, acquisitions or complex multi-year “transformation” programs.
This results in a glaring blind spot.
Blind Spot #2: Consulting relies on a a simple organization model which ignores complexity and unintended side effects.
Think about the “ cobra effect,” the famous story of an Indian village paying bounties for snakes to eliminate the snake problem which only resulted in a job-creation program for entrepreneurially-minded cobra breeders.
This happens every day in modern organizations, but the unquestioned belief and short-term amnesia of most people involved means that the same types of initiatives get rolled out over and over again.
Every day across the world, a senior executive says yes to a presentation which gives a list of initiatives they can implement, each with a specific measurement of the “impact” they can expect to see, often down to a decimal point accuracy.
The plan gets enacted and a couple years later no one checks in to see what the unintended side effects might have been. In many cases all parties involved have moved on to the next opportunity.
This approach is contrasted with an understanding of the modern organization as a complex system and one that is subject to unexpected 2nd and 3rd order effects.
Although BCG has acknowledged this paradigm, it is only written about at the fringe of their operations in their think tank, the Henderson Institute. Similarly, it wasn’t until Richard Pascale left McKinsey that he started exploring the potential for thinking about organizations within the context of chaos theory.
Ultimately, the customer of a consulting firms are senior leaders with control and power. Instead of pushing thinking on organizations and performance, consulting firms continue to focus myopically on frameworks, models and projects that can be designed and sold within the existing paradigm and are more a mirror of what organizations are already doing.
While I tend to agree with Tyler Cowen’s assessment that the consulting industry has had a positive effect spreading “managerial and technocratic expertise” globally, I think that consulting firms have failed to push business thinking in many “advanced” economies much further.
Most organizations today have a strong basic management toolkit, but lack a deeper understanding of how complexity plays a role in the types of initiatives that consulting firms typically promote.
This means that the people designing many of the biggest initiatives for modern organizations are people that are incentivized to ignore how the organization really operates.
#3 A belief that the scale of “impact” matters more than what you are doing
Much of the work of consulting is spending tons of time analyzing and identifying ways to “create value” withing an organization and then subsequently, spending an equally extensive amount of time on how to measure and prove it to the client.
Typical measures include revenue generated, costs reduced, expenses avoided, number of people affected, number of people reached or increase of shareholder value.
With the sharpest minds in the world, this kind of impact is never too hard to find. You can always “massage” the numbers across hundreds of data sets or spend countless hours “cutting” the data in different types of charts, graphs and tables.
The goal is always to find the “levers” which lead to the biggest impact.
Even though many of these calculations factor in downside, the way they are framed is always to talk about them in the positive direction.
This is hardly controversial and I would argue having an optimism mindset in business is the right frame. However, there are some hidden costs when this mindset loses its connection with the underlying information and starts to lead to the ability of people to convince themselves that anything that leads to a change is worth doing.
Blind Spot #3 An unchallenged belief in the idea of “impact,” which is an abstracted view of doing good measured by the number of people impacted, profit generated or an increase in shareholder value and only appearing in the positive sense that tends to seduce millions of people into the belief that they are “having an impact”
This pervades the consulting industry and extends to the many modern institutions that former consultants tend to join after leaving consulting — large corporations, government organizations, non-profits, NGOs and other professional services firms.
It is the deep rooted faith in the fact that top-down action, orchestrated through well designed plans (typically in PowerPoint slides), is the best way to do good in the world.
I’ve noticed that many who go on to non-profits or other large institution with a strong mission tend to assume they are doing good no matter what.
This blindness leads to a bizarre reality where one can claim that they are taking a job because they “can have more impact” when it is impossible to ever prove such a thing in any concrete way.
Think about someone that gets a job offer from Google or Facebook. Despite a minor backlash against tech, this person will still receive much more praise and support than someone that simply lands a job teaching history at their local public school.
The school teacher is motivated by teaching 30 students but the future tech worker is more excited about the ability to reach billions of “monthly active users.”
This corruption of the idea of impact undermines the prestige of many people who are having an impact at a smaller scale and it blinds us to the very real and common unintended side effects that are an expected outcome of large-scale change efforts.
#4 Work is thought to be the prime aim of life
Many people find consulting jobs and the jobs available to former consultants to be ones that are interesting, intellectually challenging and socially engaging. No one would pity the consultant and their ability to find jobs that pay six-figures quite easily.
Yet there is a trap.
People who work at consulting firms typically work long hours and the longer people spend in the industry, the more their life is centered around work. Where you live, where you eat and how often you see your partner or family are all choreographed around 24/7 work demands.
Over time it is taken for granted that everything is seen in the service of work. Leisure is solely a break from work. New connections are seen as part of building a network. Your clothes and watch and the brands you buy are part of your seriousness as a professional. The books you read are in service of your skills as a knowledge worker.
Life strategy is career strategy.
Blind Spot #4: Jobs like strategy consultant set you on a career path that nudges you into orienting your life around work, a career and your “employabilty” above all else
There is the loss of hobbies and activities that your employer or coworkers might not look highly upon. There is the slippage of time you spend with your loved ones because everyone else seems to work late and why not you. There is the slow roughening of your personality to one that laughs less and can’t take a joke because your job requires you to “be serious” most days of the week.
To be a worker means that everything is in service of your job and your career and the money you can make.
When one identifies totally as a worker something like taking a year off to care for a loved one is seen as something that is too costly to pursue. Hiring a full-time nanny is the only economic option for raising kids and resting for the sake of rest is seen as laziness. Engaging in your local community or giving money to a friend seems silly when you could just get a job working on the same problem “at scale.”
What is so disturbing about total work is not just that it causes needless human suffering but also that it eradicates the forms of playful contemplation concerned with our asking, pondering and answering the most basic questions of existence
I have talked to people of all ages from 20 to 70 who wake up to this fact and are deeply troubled by how they let their life slip away from themselves. How, in fact, did they become workers above all else?
As David Whyte says, they should have listened to their bodies instead of their incentives:
“We might at first label the body’s simple need to focus inward depression. But as we practice going inward, we come to realize that much of it is not depression in the least; it is a cry for something else, often the physical body’s simple need for rest, for contemplation, and for a kind of forgotten courage, one difficult to hear, demanding not a raise, but another life.”
Originally published at https://think-boundless.com on January 31, 2020.