Lesson No. 77

McKinsey – Too Clever, Too Greedy, Too Dangerous

by Günter Ogger



When today's President of the European Commission Ursula von der Leyen was appointed German Defense Minister by ex-Chancellor Angela Merkel in 2013, she had no idea about security policy or the German armed forces. So, she sought advice where hundreds of German executives had already begged for help: the consulting firm McKinsey. That there is often a wide gap between the talk and the reality of these smart McKinsey consultants had already been worth a cover story in Manager Magazin. It had also been analyzed in an earlier “Black Book” and Managerism thinkpieces by Manfred Hoefle, the initiator of Managerism, who branded the work of their consultants as “dangerous for the common good as well as for many of their clients”. Now criticism of McKinsey has reached another climax with the book When McKinsey Comes to Town by Walt Bogdanich and Michael Forsythe, two investigating reporters for the New York Times.

McKinsey Conquers German Defense Ministry

 Ursula von der Leyen was also forced to pay a pound of flesh to McKinsey. In 2014 she awarded the McKinsey senior partner Katrin Suder the job of German State Secretary at the Ministry of Defense. The ‘former’ consultant then used the freedoms that von der Leyen granted her freely. The NY Times reporters quoted a conversation with a senior McKinsey partner: "Katrin was placed in a position where she could always hire McKinsey." Her ministry then spent more than 100 million euros on often dubious consultancy services – per year. After an audit report from the Federal Audit Office became known, the “consultant affair” broke over Defense Minister Ursula von der Leyen. The auditors found that most contracts had been awarded without tender and were not properly documented.

Suder Awarded Gold Medal

 The Minister's chair wobbled alarmingly, but CDU Chancellor Merkel saved her party friend by asserting her influence in Brussels. And so, Ursula von der Leyen, the latest McKinsey victim, was elected the new head of the EU Commission. von der Leyen’s family didn't suffer from the consultant affair either: son David works in California's Silicon Valley for McKinsey, daughter Johanna in the Berlin branch. Katrin Suder, who caused the whole debacle, and returned to McKinsey in 2018, was awarded the German Armed Forces Cross of Honor in gold. Suder was also appointed to the Digital Advisory Board of the German government, although little had changed in the hopeless state of the armed forces or their procurement system following the million-dollar deployment of McKinsey consultants.

This pattern repeats itself in countless cases: McKinsey emerges unscathed from all affairs and becomes bigger, richer and more powerful, while quite a few of their customers pay the price.

In no other country in the world has McKinsey achieved such importance as in Germany. With cleverly prepared benchmark tables, they tried to prove that people work much more productively in the USA than in Germany with its socio-market economy, which they defamed as being too employee-friendly and not profit-oriented enough. At the same time, they propagated new management methods that, or so they claimed, would lead to more overview and control in the client corporations.

German Weakness

 Why McKinsey was so successful in Germany has a lot to do with a man whom many consider a brilliant mentor and others a wily charlatan: Herbert Henzler. Within a few years he gained access to the supervisory boards and executive boards of most large companies in Germany. For years, McKinsey Germany had higher sales and profits than its parent company in the United States. Twenty-seven of the thirty biggest German corporations were McKinsey clients. When highly paid top managers shell out millions of dollars for outside consultants, they either don't know enough about their business – or they use outside advice to justify making unpleasant decisions themselves. However, setting a company's strategy is the job of the directors and top executives, and if they delegate that job, they are not worth the money they are being paid.

Criminal Business

Ultimately, McKinsey’s own profit always counts for more than ethics and morals. According to the reporters' research, McKinsey had no scruples about helping customers with criminal transactions.

The Climate Suffers

The expertise of McKinsey consultants is no good for the global climate either. Forty-three of the one hundred largest Co2 emitters paid McKinsey for advice. That advice was not focused on reducing the emission of climate-killing gas. Indeed, some analyses tried to prove how harmless the operations of the oil, gas and coal companies were.

Danger for Democracy

McKinsey claims it helps clients to be more efficient and competitive. They never mention the damage that their consultants cause.

McKinsey strengthens the rule of the manager caste over clients, employees and shareholders; their sometime dubious studies, analyses and PowerPoint presentations impart confusion to business organizations and administrations. Workforces become anxious and demotivated. And since McKinsey extended its reach to governments and public administrations worldwide it has become a danger to democracy.

It is high time for shareholders, supervisory boards, politicians and government representatives to put an end to the wealth-exploiting practices of this parasitic firm.


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