Blue-Chip Consulting Firm Needs Lawyers and Luck
May 15, 2024
McKinsey’s blue chip consultants continue their fancy dancing to explain away an itsy bitsy problem: ruined lives and run-of-the-mill deaths from drug overdoses. The International Business Times reminds us, “McKinsey Under Criminal Investigation Over Alleged Role in Fueling Opioid Epidemic.” The investigation, begun before the pandemic, continues to advance at the glacial pace of justice. Journalist Kiran Tom Sajan writes:
“Global consulting firm McKinsey & Company is under a criminal investigation by the U.S. attorneys’ offices in Massachusetts and the Western District of Virginia over its alleged involvement in fueling the opioid epidemic. The Federal prosecutors, along with the Justice Department’s civil division in Washington, are specifically examining whether the consulting firm participated in a criminal conspiracy by providing advice to Purdue Pharma and other pharmaceutical companies on marketing tactics aimed at increasing sales of prescription painkillers. Purdue is the manufacturer of OxyContin, one of the painkillers that allegedly contributed to widespread addiction and fatal overdoses. Since 2021, McKinsey has reached settlements of approximately $1 billion to resolve investigations and legal actions into its collaboration with opioid manufacturers, primarily Purdue. The company allegedly advised Purdue to intensify its marketing of the drug amid the opioid epidemic, which has resulted in the deaths of hundreds of thousands of Americans. McKinsey has not admitted any wrongdoing.”
Of course not. We learn McKinsey raked in about $86 million working for Purdue, most of it since the drug firm’s 2007 guilty plea. Sajan notes the investigations do not stop with the question of fueling the epidemic: The Justice Department is also considering whether McKinsey obstructed justice when it fired two incautious partners—they were caught communicating about the destruction of related documents. It is also examining whether the firm engaged in healthcare fraud when it helped Purdue and other opioid sellers make fraudulent Medicare claims. Will McKinsey’s recent settlement with insurance companies lend fuel to that dumpster fire? Will Lady Luck kick her opioid addiction and embrace those McKinsey professionals? Maybe.
Cynthia Murrell, May 15, 2024
McKinsey & Co. Emits the Message “You Are No Longer the Best of the Best”
April 4, 2024
This essay is the work of a dumb dinobaby. No smart software required.
I love blue chip consulting firms’ management tactics. I will not mention the private outfits which go public and then go private. Then the firms’ “best of the best” partners decide to split the firm. Wow. Financial fancy dancing or just evidence that “best of the best” is like those plastic bottles killing off marine life?
I read “McKinsey Is so Eager to Trim Staff That It’s Offering Some Employees 9 Months’ Pay to Go and Do Something Else. I immediately asked myself, “What’s some mean?” I am guessing based on my experience that “all” of the RIF’ed staff are not getting the same deal. Well, that’s life in the exciting world of the best and the brightest. Some have to accept that there are blue chippers better and, therefore, able to labor enthusiastically at a company known as the Big Dog in the consulting world.
Thanks MSFT Copilot. (How’s your security today?)
The write up reports as “real” NY news:
McKinsey is attempting to slim the company down in a caring and supporting way by paying its workers to quit.
Hmmm. “Attempting” seems an odd word for a consulting firm focused on results. One slims down or one remains fat and prone to assorted diseases if I understood my medical professional. Is McKinsey signaling that its profit margin is slipping like the trust level for certain social media companies? Or is artificial intelligence the next big profit making thing; therefore, let’s clear out the deadwood and harvest the benefits of smart software unencumbered by less smart humans?
Plus, the formerly “best and brightest” will get help writing their résumés. My goodness, imagine a less good Type A super achiever unable to write a résumé. But just yesterday those professionals were able to advise executives often with decades more experience, craft reports with asterisk dot points, and work seven days a week. These outstanding professionals need help writing their résumés. This strikes me as paternalistic and a way to sidestep legal action for questionable termination.
Plus, the folks given the chance to find their future elsewhere (as long as the formerly employed wizard conforms to McKinsey’s policies about client poaching) can allegedly use their McKinsey email accounts. What might a person who learns he or she is no longer the best of the best might do with a live McKinsey email account? I have a couple of people on my research team who have studied mischief with emails. I assume McKinsey’s leadership knows a lot more than my staff. We don’t pontificate about pharmaceutical surfing; we do give lectures to law enforcement and intelligence professionals. Therefore, my team knows much, much less about the email usage that McKinsey management.
Deloitte, another blue chip outfit, is moving quickly into the AI space. I have heard that it wants to use AI and simultaneously advise its clients about AI. I wonder if Deloitte has considered that smart software might be marginally less expensive than paying some of the “best of the best” to do manual work for clients? I don’t know.
The blue chip outfit at which I worked long ago was a really humane place. Those rumors that an executive drowned a loved one were just rumors. The person was a kind and loving individual with a raised dais in his office. I recall I hard to look up at him when seated in front of his desk. Maybe that’s just an AI type hallucination from a dinobaby. I do remember the nurturing approach he took when pointing at a number and demanding the VP presenting the document, “I want to know where that came from now.” Yes, that blue chip professional was patient and easy going as well.
I noted this passage in the Fortune “real” NY news:
A McKinsey spokesperson told Fortune that its unusual approach to layoffs is all part of the company’s core mission to help people ‘learn and grow into leaders, whether they stay at McKinsey or continue their careers elsewhere.’
I loved the sentence including the “learn and grow into leaders” verbiage. I am imagining a McKinsey HR professional saying, “Remember when we recruited you? We told you that you were among the top one percent of the top one percent. Come on. I know you remember? Oh, you don’t remember my assurances of great pay, travel, wonderful colleagues, tremendous opportunities to learn, and build your interpersonal skills. Well, that’s why you have been fired. But you can use your McKinsey email. Please, leave now. I have billable work to do that you obviously were not able to undertake and complete in a satisfactory manner. Oh, here’s your going away gift. It is a T shirt which says, ‘Loser@mckinsey.com.’”
Stephen E Arnold, April 4, 2024
An Allocation Society or a Knowledge Value System? Pick One, Please!
February 20, 2024
This essay is the work of a dumb dinobaby. No smart software required.
I get random inquiries, usually from LinkedIn, asking me about books I would recommend to a younger person trying to [a] create a brand and make oodles of money, [b] generate sales immediately from their unsolicited emails to strangers, and [c] a somewhat limp-wristed attempt to sell me something. I typically recommend a book I learned about when I was giving lectures at the Kansai Institute of Technology and a couple of outfits in Tokyo. The book is the Knowledge Value Revolution written by a former Japanese government professional named Taichi Sakaiya. The subtitle to the book is “A History of the Future.”
So what?
I read an essay titled “The Knowledge Economy Is Over. Welcome to the Allocation Economy.” The thesis of this essay is that Sakaiya’s description of the future is pretty much wacko. Here’s a passage from the essay about the allocation economy:
Summarizing used to be a skill I needed to have, and a valuable one at that. But before it had been mostly invisible, bundled into an amorphous set of tasks that I’d called “intelligence”—things that only I and other humans could do. But now that I can use ChatGPT for summarizing, I’ve carved that task out of my skill set and handed it over to AI. Now, my intelligence has learned to be the thing that directs or edits summarizing, rather than doing the summarizing myself.
A world class knowledge surfer now wins gold medals for his ability to surf on the output of smart robots and pervasive machines. Thanks, Google ImageFX. Not funny but good enough, which is the mark of a champion today, isn’t it?
For me, the message is that people want summaries. This individual was a summarizer and, hence, a knowledge worker. With the smart software doing the summarizing, the knowledge worker is kaput. The solution is for the knowledge worker to move up conceptually. The jump is a metaplay. Debaters learn quickly that when an argument is going nowhere, the trick that can deliver a win is to pop up a level. The shift from poverty to a discussion about the disfunction of a city board of advisors is a trick used in places like San Francisco. It does not matter that the problem of messios is not a city government issue. Tents and bench dwellers are the exhaust from a series of larger systems. None can do much about the problem. Therefore, nothing gets done. But for a novice debater unfamiliar with popping up a level or a meta-play, the loss is baffling.
The essay putting Sakaiya in the dumpster is not convincing and it certainly is not going to win a debate between the knowledge value revolution and the allocation economy. The reason strikes me a failure to see that smart software, the present and future dislocations of knowledge workers, and the brave words about becoming a director or editor are evidence that Sakaiya was correct. He wrote in 1985:
If the type of organization typical of industrial society could be said to resemble a symphony orchestra, the organizations typical of the knowledge-value society would be more like the line-up of a jazz band.
The author of the allocation economy does not realize that individuals with expertise are playing a piano or a guitar. Of those who do play, only a tiny fraction (a one percent of the top 10 percent perhaps?) will be able to support themselves. Of those elite individuals, how many Taylor Swifts are making the record companies and motion picture empresarios look really stupid? Two, five, whatever. The point is that the knowledge-value revolution transforms much more than “attention” or “allocation.” Sakaiya, in my opinion, is operating at a sophisticated meta-level. Renaming the plight of people who do menial mental labor does not change a painful fact: Knowledge value means those who have high-value knowledge are going to earn a living. I am not sure what the newly unemployed technology workers, the administrative facilitators, or the cut-loose “real” journalists are going to do to live as their parents did in the good old days.
The allocation essay offers:
AI is cheap enough that tomorrow, everyone will have the chance to be a manager—and that will significantly increase the creative potential of every human being. It will be on our society as a whole to make sure that, with the incredible new tools at our disposal, we bring the rest of the economy along for the ride.
How many jazz musicians can ride on a particular market sector propelled by smart software? How many individuals will enjoy personal and financial success in the AI allocation-centric world? Remember, please, there are about eight billion people in the world? How many Duke Ellingtons and Dave Brubecks were there?
The knowledge value revolution means that the majority of individuals will be excluded from nine to five jobs, significant financial success, and meaningful impact on social institutions. I am not for everyone becoming a surfer on smart software, but if that happens, the future is going to be more like the one Sakaiya outlined, not an allocation-centric operation in my opinion.
Stephen E Arnold, February 20, 2024
The US Government Needs Its McKinsey Fix
February 20, 2024
This essay is the work of a dumb dinobaby. No smart software required.
Governments don’t know how to spend their money wisely. Despite all its grandness, the United States has a deficit spending problem. According to Promarket, the US has a spends way too many tax dollars at McKinsey and Company: “Why The US Government Buys Overpriced Services From McKinsey.” McKinsey and Company is a consulting firm that provides organizations and the US government with advice on how to improve operations.
McKinsey is comparable to the IRS conducting a tax audit on the US government. The company is supposed to help the US implement social justice, diverse, and other political jargon into its business practices. The Clinton administration first purchased the over zealous services from McKinsey. Unfortunately McKinsey doesn’t do much other than repackage mediocre advice with an expensive price tag. How much does McKinsey charge for services? It’s a lot:
“Such practices used to be called “honest graft.” And let’s be clear, McKinsey’s services are very expensive. Back in August, I noted that McKinsey’s competitor, the Boston Consulting Group, charges the government $33,063.75/week for the time of a recent college grad to work as a contractor. Not to be outdone, McKinsey’s pricing is much much higher, with one McKinsey “business analyst”—someone with an undergraduate degree and no experience—lent to the government priced out at $56,707/week, or $2,948,764/year.”
McKinsey can charge outrageous prices because the company uses unethical tactics and they can stay because the General Services Administration gets a 0.75% cut of what contractors spend. It is officially called the “Industrial Funding Fee” or IFF. The GSA receives a larger operating budget whenever it outsources to contractors.
Will changes be made for the next fiscal year? Unlikely.
Whitney Grace’s February 20, 2024
The Cost of Clever
January 1, 2024
This essay is the work of a dumb dinobaby. No smart software required.
A New Year and I want to highlight an interesting story which I spotted in SFGate: “Consulting Firm McKinsey Agrees to $78 Million Settlement with Insurers over Opioids.” The focus on efficiency and logic created an interesting consulting opportunity for a blue-chip firm. That organization responded. The SFGate story reports:
Consulting firm McKinsey and Co. has agreed to pay $78 million to settle claims from insurers and health care funds that its work with drug companies helped fuel an opioid addiction crisis.
A blue-consultant has been sent to the tool shed by Ms. Justice. The sleek wizard is not happy because the tool shed is the location for severe punishment by Ms. Justice. Thanks, MSFT Copilot Bing thing.
What did the prestigious firm’s advisors assist Purdue Pharma to achieve? The story says:
The insurers argued that McKinsey worked with Purdue Pharma – the maker of OxyContin – to create and employ aggressive marketing and sales tactics to overcome doctors’ reservations about the highly addictive drugs. Insurers said that forced them to pay for prescription opioids rather than safer, non-addictive and lower-cost drugs, including over-the-counter pain medication. They also had to pay for the opioid addiction treatment that followed.
The write up presents McKinsey’s view of its service this way:
“As we have stated previously, we continue to believe that our past work was lawful and deny allegations to the contrary,” the company said, adding that it reached a settlement to avoid protracted litigation. McKinsey said it stopped advising clients on any opioid-related business in 2019.
What’s interesting is that the so-called opioid crisis reveals the consequences of a certain mental orientation. The goal of generating a desired outcome for a commercial enterprise can have interesting and, in this case, expensive consequences. Have some of these methods influenced other organizations? Will blue-chip consulting firms and efficiency-oriented engineers learn from wood shed visits?
Happy New Year everyone.
Stephen E Arnold, January 1, 2024
Why Stuff No Longer Works Very Well
December 28, 2023
This essay is the work of a dumb dinobaby. No smart software required.
Own a Tesla? What about those Southwest flight delays? Been to a hospital emergency room in DC? Tried to get a plumber on a holiday? Yep, systems work … sometimes, sort of, or mostly. Have you ever wondered why teens working at a fruit market cannot make change, recognize a fifty cent piece, or know zero about when the grapes were put on display?
I think I have found the answer to these and other questions about modern life. Navigate to “Become an Expert in Less Than an Hour.” The write up is a how to be superficially smart. Now, don’t get me wrong, superficiality is an important characteristic. People decide whether a person is okay or not in seconds, maybe less. Impressing a person to whom one is selling a used car relies on that instant charm feature of some people. The skill of superficial smartness is important to those who want to pick up a person of interest in a bar, a consultant at a blue chip firm, a lawyer explaining his fees to a trust customer, and political advisors who shift from art history to geopolitics over lunch.
The write up reduces superficial intelligence to a cook book, and I think quite a few people will find the ideas in the essay of considerable value. Here’s an example:
“anthropologists frequently have to learn how to grok an entire subfield in under an hour. Yes, real expertise takes years of hard work, but identifying the key works and ideas that define a subfield can be done quickly if you know where to look.”
Perfect.
Stephen E Arnold, December 28, 2023
AI and the Obvious: Hire Us and Pay Us to Tell You Not to Worry
December 26, 2023
This essay is the work of a dumb dinobaby. No smart software required.
I read “Accenture Chief Says Most Companies Not Ready for AI Rollout.” The paywalled write up is an opinion from one of Captain Obvious’ closest advisors. The CEO of Accenture (a general purpose business expertise outfit) reveals some gems about artificial intelligence. Here are three which caught my attention.
#1 — “Sweet said executives were being “prudent” in rolling out the technology, amid concerns over how to protect proprietary information and customer data and questions about the accuracy of outputs from generative AI models.”
The secret to AI consulting success: Cost, fear of failure, and uncertainty or CFU. Thanks, MSFT Copilot. Good enough.
Arnold comment: Yes, caution is good because selling caution consulting generates juicy revenues. Implementing something that crashes and burns is a generally bad idea.
#2 — “Sweet said this corporate prudence should assuage fears that the development of AI is running ahead of human abilities to control it…”
Arnold comment: The threat, in my opinion, comes from a handful of large technology outfits and from the legions of smaller firms working overtime to apply AI to anything that strikes the fancy of the entrepreneurs. These outfits think about sizzle first, consequences maybe later. Much later.
# 3 — ““There are no clients saying to me that they want to spend less on tech,” she said. “Most CEOs today would spend more if they could. The macro is a serious challenge. There are not a lot of green shoots around the world. CEOs are not saying 2024 is going to look great. And so that’s going to continue to be a drag on the pace of spending.”
Arnold comment: Great opportunity to sell studies, advice, and recommendations when customers are “not saying 2024 is going to look great.” Hey, what’s “not going to look great” mean?
The obvious is — obvious.
Stephen E Arnold, December 26, 2023
AI Is Here to Help Blue Chip Consulting Firms: Consultants, Tighten Your Seat Belts
December 26, 2023
This essay is the work of a dumb dinobaby. No smart software required.
I read “Deloitte Is Looking at AI to Help Avoid Mass Layoffs in Future.” The write up explains that blue chip consulting firms (“the giants of the consulting world”) have been allowing many Type A’s to find their future elsewhere. (That’s consulting speak for “You are surplus,” “You are not suited for another team,” or “Hasta la vista.”) The message Deloitte is sending strikes me as, “We are leaders in using AI to improve the efficiency of our business. You (potential customers) can hire us to implement AI strategies and tactics to deliver the same turbo boost to your firm.) Deloitte is not the only “giant” moving to use AI to improve “efficiency.” The big folks and the mid-tier players are too. But let’s look at the Deloitte premise in what I see as a PR piece.
Hey, MSFT Copilot. Good enough. Your colleagues do have experience with blue-chip consulting firms which obviously assisted you.
The news story explains that Deloitte wants to use AI to help figure out who can be billed at startling hourly fees for people whose pegs don’t fit into the available round holes. But the real point of the story is that the “giants” are looking at smart software to boost productivity and margins. How? My answer is that management consulting firms are “experts” in management. Therefore, if smart software can make management better, faster, and cheaper, the “giants” have to use best practices.
And what’s a best practice in the context of the “giants” and the “avoid mass layoffs” angle? My answer is, “Money.”
The big dollar items for the “giants” are people and their associated costs, travel, and administrative tasks. Smart software can replace some people. That’s a no brainer. Dump some of the Type A’s who don’t sell big dollar work, winnow those who are not wedded to the “giant” firm, and move the administrivia to orchestrated processes with smart software watching and deciding 24×7.
Imagine the “giants” repackaging these “learnings” and then selling the information about how to and payoffs to less informed outfits. Once that is firmly in mind, the money for the senior partners who are not on on the “hasta la vista” list goes up. The “giants” are not altruistic. The firms are built fro0m the ground up to generate cash, leverage connections, and provide services to CEOs with imposter syndrome and other issues.
My reaction to the story is:
- Yep, marketing. Some will do the Harvard Business Review journey; others will pump out white papers; many will give talks to “preferred” contacts; and others will just imitate what’s working for the “giants”
- Deloitte is redefining what expertise it will require to get hired by a “giant” like the accounting/consulting outfit
- The senior partners involved in this push are planning what to do with their bonuses.
Are the other “giants” on the same path? Yep. Imagine. Smart software enabled “giants” making decisions for the organizations able to pay for advice, insight, and warm embrace of AI-enabled humanoids. What’s the probability of success? Close enough for horseshoes. and even bigger money for some blue chip professionals. Did Deloitte over hiring during the pandemic?
Of course not, the tactic was part of the firm’s plan to put AI to a real world test. Sound good. I cannot wait until the case studies become available.
Stephen E Arnold, December 26, 2023
A Former Yahooligan and Xoogler Offers Management Advice: Believe It or Not!
November 22, 2023
This essay is the work of a dumb dinobaby. No smart software required.
I read a remarkable interview / essay / news story called “Former Yahoo CEO Marissa Mayer Delivers Sharp-Elbowed Rebuke of OpenAI’s Broken Board.” Marissa Mayer was a Googler. She then became the Top Dog at Yahoo. Highlights of her tenure at Yahoo include, according to Inc.com, included:
- Fostering a “superstar status” for herself
- Pointing a finger is a chastising way at remote workers
- Trying to obfuscate Yahooligan layoffs
- Making slow job cuts
- Lack of strategic focus (maybe Tumblr, Yahoo’s mobile strategy, the search service, perhaps?)
- Tactical missteps in diversifying Yahoo’s business (the Google disease in my opinion)
- Setting timetables and then ignoring, missing, or changing them
- Weird PR messages
- Using fear (and maybe uncertainty and doubt) as management methods.
The senior executives of a high technology company listen to a self-anointed management guru. One of the bosses allegedly said, “I thought Bain and McKinsey peddled a truckload of baloney. We have the entire factory in front of use.” Thanks, MSFT Copilot. Is Sam the AI-Man on duty?
So what’s this exemplary manager have to say? Let’s go to the original story:
“OpenAI investors (like @Microsoft) need to step up and demand that the governance weaknesses at @OpenAI be fixed,” Mayer wrote Sunday on X, formerly known as Twitter.
Was Microsoft asleep at the switch or simply operating within a Cloud of Unknowing? Fast-talking Satya Nadella was busy trying to make me think he was operating in a normal manner. Had he known something was afoot, is he equipped to deal with burning effigies as a business practice?
Ms. Mayer pointed out:
“The fact that Ilya now regrets just shows how broken and under advised they are/were,” Mayer wrote on social media. “They call them board deliberations because you are supposed to be deliberate.”
Brilliant! Was that deliberative process used to justify the purchase of Tumblr?
The Business Insider write up revealed an interesting nugget:
The Information reported that the former Yahoo CEO’s name had been tossed around by “people close to OpenAI” as a potential addition to the board…
Okay, a Xoogler and a Yahooligan in one package.
Stephen E Arnold, November 22, 2023
The AI Bandwagon: A Hoped for Lawyer Billing Bonanza
November 8, 2023
This essay is the work of a dumb humanoid. No smart software required.
The AI bandwagon is picking up speed. A dark smudge appears in the sky. What is it? An unidentified aerial phenomenon? No, it is a dense cloud of legal eagles. I read “U.S. Regulation of Artificial Intelligence: Presidential Executive Order Paves the Way for Future Action in the Private Sector.”
A legal eagle — aka known as a lawyer or the segment of humanity one of Shakespeare’s characters wanted to drown — is thrilled to read an official version of the US government’s AI statement. Look at what is coming from above. It is money from fees. Thanks, Microsoft Bing, you do understand how the legal profession finds pots of gold.
In this essay, which is free advice and possibly marketing hoo hah, I noted this paragraph:
While the true measure of the Order’s impact has yet to be felt, clearly federal agencies and executive offices are now required to devote rigorous analysis and attention to AI within their own operations, and to embark on focused rulemaking and regulation for businesses in the private sector. For the present, businesses that have or are considering implementation of AI programs should seek the advice of qualified counsel to ensure that AI usage is tailored to business objectives, closely monitored, and sufficiently flexible to change as laws evolve.
Absolutely. I would wager a 25 cents coin that the advice, unlike the free essay, will incur a fee. Some of those legal fees make the pittance I charge look like the cost of chopped liver sandwich in a Manhattan deli.
Stephen E Arnold, November 8, 2023
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