When McKinsey Comes to Town
The Hidden Influence of the World's Most Powerful Consulting Firm
byWalt Bogdanich, Michael Forsythe
Book Edition Details
Summary
In the shadows of corporate ambition, When McKinsey Comes to Town unveils the unsettling reality behind the world's most revered consulting titan. This investigative masterpiece by Bogdanich and Forsythe peels back the polished veneer of McKinsey & Company, revealing a firm whose strategic counsel often prioritizes profits over people. The book exposes the stark dissonance between McKinsey's proclaimed ideals and its actions, from fueling the opioid crisis to empowering authoritarian regimes. With gripping narratives backed by thousands of insider documents, this exposé challenges the integrity of a company that plays both sides, advising governments and competitors alike, while remaining shrouded in secrecy. Prepare to confront the moral complexities and far-reaching consequences of a consultancy that shapes global policies and economies, often leaving a trail of inequality and corruption in its wake.
Introduction
In the gleaming towers of Manhattan and the corridors of power in Washington, a name whispers through boardrooms and government offices with almost mystical reverence: McKinsey & Company. For nearly a century, this consulting firm has shaped the decisions of Fortune 500 companies, guided government policies, and influenced the very fabric of American capitalism. Yet most people have never heard of it, despite the profound impact it has had on their daily lives. This story reveals how a small accounting firm founded in 1926 grew into the world's most powerful consulting empire, advising everyone from tech giants to tobacco companies, from the Pentagon to authoritarian regimes. It uncovers how McKinsey's army of brilliant young consultants, armed with spreadsheets and PowerPoint presentations, have quietly engineered corporate downsizing, accelerated globalization, and helped create the stark inequality that defines modern America. Through meticulous investigation and unprecedented access to internal documents, we discover the hidden mechanisms by which McKinsey has accumulated influence far beyond what any private company should possess in a democratic society. For business leaders seeking to understand the forces reshaping corporate America, policymakers grappling with regulatory capture, and citizens wondering why the economy seems rigged against ordinary people, this examination offers crucial insights into how power really operates in the twenty-first century. The story illuminates the dangerous gap between technical expertise and moral accountability that has come to define our era.
Foundation and Early Influence: Building Corporate America (1926-1980)
In the depths of the Great Depression, as breadlines stretched around city blocks and factories shuttered their doors, a young accountant from the Missouri Ozarks named James O. McKinsey saw opportunity in chaos. Founded in 1926, his small Chicago firm initially performed mundane accounting work, but McKinsey possessed a grander vision: to apply scientific management principles to transform American business. The firm's early breakthrough came through brutal efficiency, epitomized by what became known as "McKinsey's Purge" at Marshall Field's department store, where nearly twelve hundred jobs were eliminated in the name of modernization. The true architect of McKinsey's empire, however, was Marvin Bower, a Harvard-trained lawyer who joined in 1933 and spent the next four decades molding the firm into something unprecedented in American business. Bower insisted that McKinsey call itself a "firm," not a company, run a "practice," not a business, and engage in client "engagements," not jobs. This professional mystique, borrowed from prestigious law firms, elevated McKinsey above mere vendors to become trusted advisors to America's corporate elite. Bower's cardinal rule, "client first," became gospel, creating an organization that would do virtually anything to serve those who paid its fees. During the post-war boom, McKinsey rode the wave of American corporate expansion, helping giants like General Motors and U.S. Steel navigate rapid growth and international competition. The firm pioneered the art of corporate reorganization, introducing "matrix management" and other organizational innovations that promised to unlock efficiency and profits. More significantly, McKinsey began studying executive compensation, publishing research that would fundamentally alter the relationship between corporate leaders and their workers. In 1950, the typical CEO made twenty times what a production worker earned; McKinsey's compensation studies would help justify exponential increases in executive pay over the coming decades. By 1980, McKinsey had established itself as the premier consulting firm in America, with a global network of offices and an alumni network that placed former consultants in positions of power throughout corporate America and government. The firm had mastered the art of influence without accountability, shaping major business decisions while remaining largely invisible to the public. This foundation of power and prestige would prove crucial as American capitalism entered a new, more ruthless phase in the decades to come.
The Transformation Era: Financialization and Global Expansion (1980-2010)
The 1980s ushered in a new era of American capitalism, and McKinsey positioned itself at the vanguard of this transformation. As corporate raiders and leveraged buyout specialists dismantled the stable, paternalistic corporations of the post-war era, McKinsey provided the intellectual framework for what it called "shareholder value maximization." The firm's consultants became evangelists for downsizing, offshoring, and financial engineering, helping to dismantle the social contract between employers and workers that had sustained the American middle class for decades. McKinsey's influence extended far beyond corporate boardrooms during this period. The firm began advising government agencies, including the FDA and Pentagon, while simultaneously consulting for the very industries these agencies were supposed to regulate. This revolving door of influence allowed McKinsey to play both sides of regulatory battles, advising pharmaceutical companies on how to navigate FDA approval processes while helping the FDA reorganize its operations. The firm's partners moved seamlessly between corporate suites and government offices, carrying McKinsey's philosophy of market-driven solutions into the highest levels of policymaking. The human cost of McKinsey's efficiency revolution became increasingly apparent as the firm helped orchestrate massive job losses across American industry. The consultants developed sophisticated analytical tools to identify "redundant" workers and optimize supply chains through global outsourcing. McKinsey's promotion of offshoring to countries like India and China accelerated the deindustrialization of America, contributing to the hollowing out of manufacturing communities across the Midwest and South. Yet the firm framed these changes as inevitable market forces rather than policy choices driven by a particular vision of capitalism. Perhaps most troubling was McKinsey's work with morally questionable clients during this era. The firm advised tobacco companies on marketing strategies even as the health risks of smoking became undeniable, helped Enron develop the corporate culture that would lead to one of history's largest bankruptcies, and began building relationships with authoritarian governments around the world. These engagements revealed a fundamental tension at the heart of McKinsey's business model: the conflict between the firm's stated values and its willingness to serve any client that could pay its fees.
Crisis and Controversy: Ethics Scandals and Public Reckoning (2010-Present)
The twenty-first century brought McKinsey unprecedented global reach and influence, but also its greatest ethical challenges. As the firm expanded into emerging markets, it began advising some of the world's most controversial clients, including authoritarian governments in China, Russia, and Saudi Arabia. McKinsey's work with Chinese state-owned enterprises helped strengthen the economic foundation of the Communist Party's rule, while its consulting for the Saudi government occurred even as the kingdom engaged in human rights abuses and regional conflicts. The firm's domestic work became equally controversial as McKinsey helped implement some of the Trump administration's most polarizing policies. Internal documents revealed that McKinsey consultants recommended cost-cutting measures for Immigration and Customs Enforcement that would reduce spending on food, medical care, and supervision of detainees. When these recommendations became public, they sparked the first major internal revolt in McKinsey's history, with hundreds of consultants signing protest letters and threatening to resign. McKinsey's involvement in the opioid crisis represented perhaps the nadir of the firm's ethical compromises. For fifteen years, McKinsey advised Purdue Pharma and other opioid manufacturers on strategies to "turbocharge" sales of addictive painkillers, even as overdose deaths mounted across America. Internal emails revealed that senior partners discussed destroying documents to hide their involvement, leading to the firm's first major legal settlement and public apology in its nearly century-long history. The six hundred million dollar settlement with state attorneys general forced McKinsey to confront the gap between its stated values and its actual conduct. The climate crisis posed another test of McKinsey's values as the firm publicly advocated for urgent action on carbon emissions while simultaneously helping fossil fuel companies maximize production and profits. More than eleven hundred McKinsey employees signed an internal letter demanding that the firm stop working with coal companies and other major polluters, but senior leadership refused, arguing that they could only help clients decarbonize by maintaining relationships with them. This response highlighted the fundamental challenge facing McKinsey in the modern era: how to maintain its business model of serving any paying client while satisfying employees and the public who expect corporate responsibility.
Summary
The century-long rise of McKinsey & Company illuminates a fundamental tension in modern capitalism between efficiency and equity, between serving shareholders and serving society. The firm's story reveals how a small group of highly educated consultants, armed with analytical tools and freed from accountability to the broader public, can reshape entire industries and government policies to serve the interests of their clients. McKinsey's influence demonstrates how power in America increasingly flows through private channels, beyond the reach of democratic oversight or public debate. The firm's evolution from a Depression-era accounting practice to a global consulting empire mirrors the broader transformation of American capitalism from a system that balanced multiple stakeholders to one that prioritizes shareholder returns above all else. McKinsey's role in promoting downsizing, offshoring, and executive compensation increases helped create the inequality and social fragmentation that characterizes contemporary America. Yet the firm's leaders consistently frame these outcomes as the inevitable result of market forces rather than conscious policy choices. Perhaps most importantly, McKinsey's story offers lessons about the need for greater transparency and accountability in how major decisions affecting millions of people are made. The firm's ability to operate in secrecy, advising both regulators and the regulated, both democratic governments and authoritarian regimes, represents a fundamental challenge to democratic governance. As societies grapple with climate change, inequality, and technological disruption, the McKinsey model of influence without accountability may prove increasingly unsustainable in a world demanding greater corporate responsibility and democratic participation in shaping our collective future.
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By Walt Bogdanich
