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Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

mattstoller.substack.com

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Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#71

Post by jariel »

txcwpalpha wrote: post #40
xvector wrote: post #23

From the linked article[1]: I find it absolutely INSANE that highly specialized organizations like the NSA rely on McKinsey to direct their future operations. These people have intimate knowledge of their organization and culture, shaped and hardened by years of challenges and learned experiences. What can they possibly think bringing an outsider in to do a complete overhaul will solve!? Why can they not apply their…

>It seems like you’re just paying people for critical thinking. That's exactly what it is. Unfortunately most organizations, probably even ones like the NSA, really struggle with doing any kind of critical thinking on their own. This is especially true when trying to decide on a future direction for the org: the org itself is most likely biased to just doing things the way it's always been done. In that regard, havin…

" the org itself is most likely biased to just doing things the way it's always been done."

This is powerful, and true, because often nobody has the power to change anything.

This is why 'funder led' companies can have an advantage, founders have that 'mythical status' that enables them to move the needle on projects. Of course this can be bad as well, but hopefully the bad ones fail early.

Even 'good companies' are full of cruft and bureaucracy - Google, Apple, MS, FB no exception. It seems the 'good companies' are able to move the pieces they need to move quickly enough to steer towards market needs, knowing large chunks of the company will be left behind.

Think of all the Apple apps that have only marginally changed in a decade, and how many zillions of devs are working on them.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#72

Post by mac01021 »

txcwpalpha wrote: post #16

There's a lot to unpack here, but the general gist is that McKinsey is overpaid for mediocre services. It's hard to argue against that, and McK in particular does have some insanely unjustifiable rates, but I do think the author has a bit of a misunderstanding of why consultancies are hired in the first place. To be clear, when a consultancy like McK puts a 23 year old analyst on a project, the $50k/week bill isn't j…

> The analyst is really just a vehicle to deliver the expertise of the actually-experienced consultants and knowledgebase of the entire firm. The experienced consultants don't have the time to sit and write out the powerpoint deck, so instead they throw as much knowledge as they can at the analyst and the analyst is the one who synthesizes it into something digestable by the customer. Is it worth $50k/week? Fuck no. But it is at least worth recognizing that you are getting more expertise than a sole bachelor's degree.

How much do those more experienced analysts make per week? I would think $50k per week would be enough to buy me the undivided attention of _all_ of whatever team of people at the consultancy has the expertise I need.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#73

Post by mathattack »

z3ugma wrote: post #21

I was a technical project management consultant for a long time. The value that most orgs get from a consultant isn't really in the advice the consultant gives them, it's the political cover to make changes they knew they should make all along, but didn't have the social capital or the focus to make those changes until they had a person in a chair across from them.

Same as “nobody got fired for hiring IBM”

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#74

Post by wgerard »

alexchamberlain wrote: post #41

> ... Work of a 23-Year Old This really bothers me. I understand the point of the article is that they're charging a lot of money for an inexperienced consultant and no bias (discrimination) was meant, however, age is irrelevant. There are a lot of very "experienced" 23 year olds, as long as you're asking them about the work they've done. There are a lot of people in their 50s with very little experience (as their ac…

I think the point is more like:

It's hard to imagine a recent college graduate understanding the machinations of corporate entities enough to give meaningful advice about how to run more "efficiently". It's a bit like when a SV company is promising to revolutionize farm equipment and the founders have no background in agriculture - weirder things have happened, sure, but you can see why people are a bit skeptical.

Yes, it's obviously a bit unfair because sometimes untainted eyes can be the most beneficial, but hopefully you can also see why there's a bit of skepticism.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#75

Post by crazygringo »

gowld wrote: post #65
z3ugma wrote: post #21

I was a technical project management consultant for a long time. The value that most orgs get from a consultant isn't really in the advice the consultant gives them, it's the political cover to make changes they knew they should make all along, but didn't have the social capital or the focus to make those changes until they had a person in a chair across from them.

This is why consultants hire Ivy League graduates. To create a myth of "Ivy League" "quality" justifying the decisions they are hired to recommend. The other thing management consultants do is industrial espionage -- they go into a company to learn how it work, and then advise other companies on how "industry leaders" operate.

Well, it's not just that.

Basically they need a bunch of people who are really good at ingesting a ton of data, analyzing it, and summarizing it.

Turns out those are exactly the same skills involved in writing academic papers, which gets you good grades.

So these people really are statistically disproportionately the people in Ivy League schools and similar who also got high GPA's in those schools.

So there's some reality behind what you call a myth.

(Obviously you can still be awesome at that and not have gone to an Ivy League school, that goes without saying.)

Edit: in response to a comment below... also you can of course be at an Ivy and not be a good writer too. Which is why consulting firms tend to have extremely selective hiring on campus through interviews with many rounds where most applicants get rejected, and pay huge attention to your GPA at college.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#76

Post by txcwpalpha »

xvector wrote: post #64
txcwpalpha wrote: post #40

Earlier quoted context omitted.

>It seems like you’re just paying people for critical thinking. That's exactly what it is. Unfortunately most organizations, probably even ones like the NSA, really struggle with doing any kind of critical thinking on their own. This is especially true when trying to decide on a future direction for the org: the org itself is most likely biased to just doing things the way it's always been done. In that regard, havin…

Getting an outsider perspective - sure. That I can get behind, it can obviously be helpful. But getting an outsider to tell you what to do? A complete overhaul? That’s a leap. You’re going from getting perspective to getting directed by an outsider. A recipe for disaster, and from what we’re seeing here, that’s exactly what has happened.

>You’re going from getting perspective to getting directed by an outsider

Yes, but it's not like this outsider has no idea what they're talking about. This outsider has decades (sometimes centuries) of knowledge working with organizations exactly like yours, and they have seen what works and what doesn't. When McK goes to consult for the NSA, they likely bring along with them experience from doing similar projects for the CIA, or DIA, or DoD. Your own organization likely doesn't have much insight into the successes and failures of your fellow (sometimes competitor) organizations, while a consulting company does, and they can lend you that knowledge.

At least, that's what is supposed to happen (and indeed it does happen if you are diligent about the specific team of consultants you hire). I have increasingly witnessed a lot of deception and bullshit in the consulting industry, so it's completely understandable to me why people are skeptical.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#77

Post by gwd »

surak wrote: post #49

McKinsey have messed up government policies all over the world when it comes to McDonaldization of Society. They are using simple measurements to model how complex societies should work, unfortunately this is only works for McKinsey and their partners.

Sounds a bit like a lot of "machine learning" actually (when it's done blindly).

But do you have any specific references for the kind of thing you're talking about? It sounds plausible, but if I had a dollar for every time something plausible-sounding was completely wrong...

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#78

Post by 12xo »

This type of stuff is endemic to all bureaucracies.

Managers are too scared to make decisions so they look outside in order to justify any decision.

Its maddening as these are the very people who are paid to make these types of decisions, yet they dont. And due to their employer being a public entity, they are not held to any real standards nor limited by such pesky matters as profits and productivity.

It happens in local government,it happens at the state level and its absolutely enormous at the federal level. The waste is astounding, as are the underlying causes.

Its so simple to solve, yet as long as we have the fox's guarding the hen houses, it will remain.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#79

Post by salamander014 »

globuous wrote: post #48
z3ugma wrote: post #21

I was a technical project management consultant for a long time. The value that most orgs get from a consultant isn't really in the advice the consultant gives them, it's the political cover to make changes they knew they should make all along, but didn't have the social capital or the focus to make those changes until they had a person in a chair across from them.

This ! In france, its a classic move by big companies to have mbb formalize what they already know: a need to restructure which unfortunately involves firing people. Its easier to justify restructuring because mbb said so than because the company says so for some reason ^^

Companies trust capital expenses more than operational expenses for some strange reason. I don't know why.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#80

Post by crusso »

z3ugma wrote: post #21

I was a technical project management consultant for a long time. The value that most orgs get from a consultant isn't really in the advice the consultant gives them, it's the political cover to make changes they knew they should make all along, but didn't have the social capital or the focus to make those changes until they had a person in a chair across from them.

it's the political cover to make changes they knew they should make all along

No argument here. Every single time that I've been in an organization that has brought in management consultants, the results of their work were almost exactly in line with advice that we had been feeding upper management for some time.

It's infuriating to have the right answers to solve problems while people at the top ignore good advice and then spend huge amounts of money to get that good advice repeated to them by other people.

Even worse is when upper management acts like the consultant advice is the first time they've heard those recommendations.

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