McKinsey: Something to hide?

how to do purpose right. We're really proud of what we've made so far, and we're super excited about getting season three into production so we can share it with all of you now to the help we need. So far, we are self funded. We need a sponsor or sponsors to help us with the cost of production. But, and this is important, we feel like it would be disingenuous given the theme of the show to accept money from just anybody. It's important to us that the sponsors of

this show shared of shows values. We're looking for partners who are purpose lead themselves, Companies or organizations that truly walk their talk. Companies who understand the harm that purpose washing does and who understand how important it is for all of us that more companies embrace the path to purpose. If you're a part of an organization like that, or you know one that seems like a good fit, don't

hesitate to drop us a line. You can reach me directly at Team Montague at Calling Bullshit podcast dot com. Thanks for listening, and let's get on with the show. McKenzie the enigmatic global consulting firm. Their influence unrivaled, their talent extraordinary, their allure irresistible, their bullshit undetected until now.

Welcome to Calling Bullshit, the podcast about purpose washing, the gap between what an organization says they stand for and what they actually do and what they would need to change to practice what they preach. I'm your host, Time Montog You and I've spent over a decade helping organizations define what they stand for, their purpose and then help them to use that purpose to drive transformation throughout their business. Unfortunately, at a lot of institutions today, there's still a pretty

wide gap between word and deed. That gap has a name, bullshit. But, and this is important, we believe that bullshit is a treatable condition. So when our bullshit detector lights up. We're going to explore rethink the organization should do to fix it. The campaign that Purdue launched when it put oxy content on the market was designed to make doctors I think that hoping it's rarely cause addiction. Now dozens of states and cities to filed lawsuits accusing Purdue of helping fuel

the current health crisis with misleading marketing. I can't remember last time the FDA was a friend or or the spark for a rally for some of the tobacco stocks, But that's what we saw yesterday and Run ultimately filed for bankruptcy. Approximately twenty jobs and two billion dollars in employee retirement funds were lost. Many executives were brought to justice, and some of them ultimately ended up receiving prison sentences.

Many Americans are struggling and barely getting by, but not everyone. Into the Economic Policy Institute, American CEOs were paid three hundred and fifty one times as much as a typical worker. The Department of Homeland Security has redirected hundreds of millions of dollars to immigration enforcement, growing the size and scope of ICE. The government has pulled money that was supposed to be spent on the Coast Guard, on t s

A aviation security, and on FEMA hurricane relief. The U S Intelligence report has concluded that Saudi Crown Prince Mohammed bin Salmon personally approved the murder of the exiled journalist Jamaica and Ron, the Immigration and Customs Enforcement Agency a k a ICE, Big Tobacco, the f d A, Perdue Pharma, Big oil, and the Saudi Arabian government. What's the thread that connects all of these controversial organizations, governments and industries.

They have all been clients of Mackenzie. Coincidence, bad luck, or is there something about Mackenzie that draws them into these dark corners of capitalism? The story of McKenzie and the story of global capitalism are inextricably linked. The firm consults with heads of state, boards of directors, and CEOs of most, if not all, of the most powerful corporations and countries on the planet. You'd be forgiven for not knowing much about Mackenzie. Secrecy is a precious organizational currency.

Few people outside the firm have a clear idea of the full scope of their activities. Few people inside the firm know the full scope either. What is common knowledge is that for the past hundred years, McKenzie recruits elite talent from only the top tier universities. Mackenzie also sells these recruits. It's on the idea of wealth without guilt.

To the young, gifted, and ambitious, a job at McKenzie is the ultimate initiation into success, with alumni currently holding high positions in government, as well as running companies like Google, Morgan Stanley, JP, Morgan Chase, IBM, Disney, and Boeing, to name just a few. They claim to be a values driven firm. Values like practicing high ethical standards, having an obligation to dissent, maintaining an independent perspective, and above all,

serving the client first. If you were to visit their website, you'd see they claim to be a purpose led company. Their purpose to create positive, lasting change in the world, although that purpose is a little vague. As you listen to this story on old you'll begin to realize as I did, that because of their power to accelerate the adoption of new ideas across their client base, there is no company better positioned to create positive, lasting change to

the system of capitalism than McKenzie. So do their deeds back up their words. Does their value of serving the client first mean that every other value comes second? Can we trust any company to be purpose led when they operate in almost total secrecy? Flip on your BS detectors, folks, and join me as I talk with three people who are deeply qualified to help us discover the truth behind

these questions and more. A New York Times investigative journalist and co author of the new book When McKinsey Comes to Town, followed by two former McKinsey consultants who have worked inside the belly of the beast. Folks, I am very excited to welcome New York Times journalist and author Mike Forsyth. Mike, thank you for being here today, and

welcome to calling bullshit. I'm so happy to be here. Ti. So, you and your co author, Wolf Buck Danich have written a fascinating book about Mackenzie, which I found both fascinating and honestly a little bit scary. What what moved you to write about this topic? So all credit goes to uh my co author Wald Buck dani He started looking at Mackenzie back in because he saw that Mackenzie's work was contributing to inequality and was it was such a

powerful secretive firm. So he was pitching two editors back then, let's write about this firm. Our first bite of the apple in was about mackenzie's work in South Africa. But in that story we also mentioned a little bit about McKenzie's work with ice. That led to, you know, another chain of events, and we just kept writing and writing, and we just kept writing. How would you describe what

McKenzie does. So they're a management consulting company, so more than thirty thousand people started in the US, but actually most of their employees are outside of the US. Now, when you say a management consulting company, they work for the C suite, the CEO, CFOs, CEOs, and a lot of the time their work is garden variety cost cutting recommendations.

That's what they're known for, probably the best. You know, they're the people you fear when they come in and they figure out where jobs need to be cut, you know. So there's the efficiency experts, the efficiency experts, and they have been for they've been around for nearly a hundred years and they've always been the efficiency experts. But they do a lot more than that, uh, you know, they they help with refocusing companies focusing on new lines of business.

They help governments reorganized departments such as the FDA for example. Uh And they also, I think, and this is really important. Over the decades, and especially since the nineteen eighties, they have been big propagators of ideas around the world, diffusers of knowledge, so they are very powerful propagators of information. Yeah, they're almost like the global nervous system for the business community, right like they are the behind the scenes transmitter of

vital information. McKenzie is an almost mythic brand in consulting. They have a reputation for being incredibly smart, extremely effective, and intensely secretive. My first question here really is how did you get the access that you needed to even tell this story. There's a lot of ways we did it. One thing that surprised us early on was people coming to us working at McKinsey or had just left McKinsey

to tell their stories. And it took a while, but we realized why because mackenzie is such a different company from like say Goldman Sachs or some private equity company, where you know, there's no pretense when you work there, You're there to earn money, you're there to be part of unfettered capitalism if you're at Goldman Sachs, right. But at Mackenzie, they lure very idealistic, very intelligent people into

the company. Their recruiting pitch is all about making a difference, and they talk inevitably in their recruiting pitches talking about things you could do to make the world better, you know, with climate or you know, with health, things like that. And it's because of that that people when they got there, realized they've been sold a bill of goods, and they came to us, and some of them came with some

extraordinary information. And this didn't surprise me, to be honest, because Mackenzie does use that technique of trying to trying to rude people who really want to make a positive impact on the world, and they recruit from some of the best schools around the world. A large group of people both inside the company today and also people who have left the company who feel some loyalty to it, right they joined it for the right reason. They want

to kind of protect it. You know. The impression I get from your book is many of them hate seeing when the company gets involved in unsavory things or things that are, you know, they know are going to damage the brand. It almost feels like they come to McKenzie's defense sometimes some people. The more senior the people are,

the more they come to mckensey's defense, it seems. Uh. And it's the younger people that you know, haven't spent their whole lives there are that the prime of their lives there who can move on and do other things that are more likely to come to us. So it's true. I think the majority of the whistleblowers we had are

the really good sources we had were on the younger side. Yeah, And it was over and over again in the book that the young can Sultan's kind of rose up when there was, you know, malfeasance of of one kind or another. It's it's good to see that there are internal checks and balances as well. So you touched on this, but I want to dig a little bit deeper. The company also claims to be purpose let itself and they say their purpose is to create positive, enduring change in the world.

And so right out of the gate, what do you think about that purpose? Having written that this book, I think it's a very noble purpose. Agree, The whole point of the book is that they don't live up to that purpose in many important ways, and some of the work that they do does real harm to the world. But you know, they also have values, and that's the crux of the problem is that their number one value, you know, over the decades, has been to serve the

client first. So, um, let's get into some of the things that really opened my eyes in this book. One of the many unexpected things that I got from it is mackenzie's role in a number of aspects of let's call it lead stage capitalism. So, for instance, income inequality. I never thought about McKenzie when it came to that topic. Can you talk about how the firm had a role in the you know now vast and growing divide between workers and managers. There are so many ways that mckensey's

had a big role in this. But it started in nineteen fifty and McKinsey had been hired by General Motors to do a study about a compensation for its executives and and mckensey looked at compensation at many companies and it was this hot shot partner, young guy named Arch Patton back in nineteen and he made an amazing discovery. He discovered that workers pay was catching up to executive pay, or was growing faster than executive pay. So the game

between executives and workers was narrowing. Well wasn't big enough. And you know, and this was a time when labor unions were strong. There had been you know, something called the Treaty of Detroit, where you know, workers got all sorts of benefits, you know, so that they wouldn't strike.

So this got spread around from company to company, and some companies executives didn't like the fact that they were ranked lower than other ones, and it started this race to the top where the companies would raise pay for their executives based on these McKenzie studies. That happened year after year after year, and this guy arch Patton would publish these unfortunate he published these in the Harvard Business Review. So company executives started knowing what people in other industries

were making. They didn't want to be behind. Stock options started becoming in vogue. Mckensey did these compensation studies, you know, for for individual companies and became a very big part of the firm's work. And this guy alone was billion about ten of all revenue at mckinn z at the time. Yeah, so he built a huge practice and you could you kind of go, let's see, let's who are you going to call if you want to get a get a raise and you're a CEO, call call our chip McKenzie,

right right. Yeah. Simultaneously though, McKenzie is as the efficiency expert showing some of those same companies how to cut costs by downsizing and then ultimately offshoring talent to other countries to drive compensation of workers lower. That's right. So offshoring was all the vogue at McKinsey in the nineties. There were mckensey partners writing books about the benefits of

off shoring globalization. You know, McKenzie would just talk about this with endless companies and they would put slides in slide decks about the benefits of globalization, that benefits of moving your work to China from the United States. And so because of their reach and all these corporate ward rooms, they were able to spread this gospel about the benefits

of off shorey. So just to unpack this, McKenzie profits by helping shareholders profit by firing American workers on mass in some cases, or firing them and moving their jobs overseas. And then they also profit by helping management profit by starting an executive pay practice that drives CEO pay into the stratosphere. That's quite clever, and it leads to a second eye opening aspect of the book. I learned that in multiple industries and engagements, mackenzie often profits from working

for both sides of an issue. I was really struck by their relationship with not only Big Tobacco, who they worked with for years, but also their relationship with the FDA Center for Tobacco Products, which is responsible for regulating Big tobacco, and they worked with those entities, as I understand it, simultaneously, they also consulted with Jewel, which at the time claimed to be a smoking cessation product, as Jewel wound up marketing their product to teens and thereby

addicting an entirely new generation to nicotine. And this strategy of working multiple size of the problem has has netted the company massive fees over the years, has it not? It really has. Almost since the beginning of McKenzie, they've been happy, and they've they've made it clear that they work for multiple companies in the same industry, so for example, they could work for four GM and Chrysler at the

same time. But but what you said is on a different level entirely when McKenzie is working for both the regulator, with the FDA being the poster child, and then the companies that are actually regulated. And as you pointed out, the the idea that McKinsey was working um for big tobacco and they only stopped working for big Tobacco in one Yeah, and I guess somehow this is all legal question mark, So that is a question. It appears to

be legal. You know, McKenzie had to pay more than six hundred million dollars are settled with these states attorneys general investigations last year into their work with opioid makers. They write Perdue and oh Melon crossed several of the opioid makers Jay and Jay that that they admitted no wrongdoing. And that's a constant theme. And you know, the certainly the Congress has been really looking into this conflict as well.

There were some very testy hearing back in April when members of Congress were asking the head of mackenzie, this guy named Bob stirred Fell's point, like, you know, how can you work for the f d A and uh, the regulated companies like Perdue at the same time. Now, of course he would say, well, the work we did for the f d A wasn't specific to any of these companies, so there was no conflict, right, yeah, so legal or potentially legal? Would you consider that to be ethical? No? No,

straight up no, yeah, you know, and neither right. And one thing we discovered is we talked to some people at the FDA or former people, senior people. Hey, did you know that McKenzie was also advising these drug makers, these tobacco makers at the same time they were advising you, And they didn't know it was. They were surprised, which

is terrible. It's right, you know. And I've always thought mackenzie's secrecy is a little bit of just a kind of marketing ploy to create mystique, but it does seem like it's it's actually a really important part of their business model, because if you have total secrecy on everything that you're working for, both internally and externally, you can get away with stuff like that. That's right. We only know what we've uncovered, but you know, there's lots more

secrets out there, I'm sure. Uh, And You can do a lot of things if no one knows what you're doing. Right. There was another story that you told in the book that I don't know whether this is working two sides of an issue, but I did find it cynical. You tell the story of Dixon Pinner, who is or was Mackensey's head of sustainability at the Aspen Ideas Festival, talking about the pressing need for corporations to take quick and dramatic action on climate change. That's great at the Aspen

Ideas Festival. But this is a company that worked for years and continues to work with some of the biggest fossil fuel companies in the world. Right, So we called McKenzie out on this in a story in The New York Times a year ago, and it's a you know, it's a big chapter in our book. Again. If mackenzie was working with big oil, you know, the gas companies, the coal miners, to reduce their carbon emissions, that would be laudable. And Dick and Penner, he's like, he's head

of the sustainability for them. He he knows about climate change. He he can really do a great presentation showing how urgent the problem is. And he's done lots of great report The problem is, I tell you, we did this story a year ago, and McKenzie is unapologetic about its work with these companies. What we tried to do, and it's in the book, is to show that a lot of their work with these companies has nothing to do

with cutting their carbon emissions. It has everything to do with making them a more profitable and more productive coal mining company or oil company or gas company. In on their website, there all these studies of McKenzie is doing all this, these words about, you know, committed to protecting the planet, committed to reducing emissions, and yet at the same time, these big clients that they're working for are are,

you know, some of the world's biggest polluters. Yeah, some of the data that you have in the book is incredible. Let me just read a bit. Is a note I wrote here for myself for a firm committed to protecting the planet. McKenzie counts seventeen mining and fossil fuel companies among its biggest clients. Collectively, those clients have earned McKenzie

hundreds of millions of dollars in recent years. Since two thousand and ten, McKenzie has worked with forty three of the hundred companies that have pumped the most carbon dioxide

into the atmosphere since nineteen sixty five. These forty three companies were responsible for thirty eight percent of the entire planets carbon dioxide output in and Chevron number three on the list, paid McKenzie fifty million dollars in fees in So they're hardly not in the carbon business and for them to make any claims about being pro sustainability seems

ridiculous to me and a little dangerous. It does. And I tell you, you know, they were apologetic about their work with opioid makers, they were apologetic about their work in South Africa, but they are not apologetic about their work with these carbon emeters. And that's not to say that mckenzy doesn't do good work, you know, on sustainability. They do some and uh and they do work with some great green companies and and that's a fact, but they also do you know what we outline that these

work with these big polluters. You know, one of the things that you point out in the book is that McKenzie is really good at spreading ideas and they've done it many times over their history, and we're now feeling what I hope is a new day dawning in capitalism, and mackenzie could be tremendously powerful if they decided to really get behind, for instance, conscious capitalism. I couldn't agree more. One of the things McKenzie does really well is higher

really smart people who will work their butts off. And if those people can be harnessed to consistently do things that are good and will make the world more sustainable and more equitable, you know, all within the free market framework, which is not a contradiction, then hats off to them if they can do that. Let's touch on another topic that is contained in the book which I did not realize,

which is McKenzie's were with authoritarian governments. You tell two stories about this, McKenzie's work with the Chinese government and their work with the Saudi Arabian government, and it just struck me that mackenzie is is very good at finding growth industries and attaching themselves to them, and authoritarianism seems to be spreading around the globe. Is this the new growth industry for mackenzie? So um, After we wrote about their work in China, after we wrote about their work

in Saudi Arabia. McKenzie did say that they've changed the way they select clients and now they say they will not work for the defense ministries, justice ministries, lease interior ministries of authoritarian countries. Um. But a lot of the harm and a lot of the power in authoritarian countries is not in those ministries. It's in the ministry of economy.

For example. If you're working to make an authoritarian country like Saudi Arabia more robust that the theocratic autocratic House of Saoud, you know, more sustainable, you do, You're doing that through the Ministry of Economy. And that's what we've found that that work is still continuing McKenzie still in Saudi Arabia and in China. We also discovered that McKenzie for a time was a real champion of some of these marquee Chinese policies that were meant to burnish Chinese

power throughout the world. They have come out publicly and said they've changed their ways with regard to, for instance, the Chinese government. Are they explicitly not working with Chinese government owned or run companies. No, no, no, they have not said that at all, So they they are still working with some of the biggest Chinese state owned companies. What we looked at in our book is the nineties six Chinese companies, which are the centrally managed state owned

companies that they're called the John Young Ta. These are the companies that are the basis for Chinese state power. And so there are many of these companies that mckensey works for. In fact, we never found them really working for the you know, the interior ministries the defense ministries in these countries, but they don't have to work with those ministries necessarily to be engaged in work that's in direct opposition to, for instance, the interests of the United States,

that's right. So you know, one of the areas we we looked at was their work for a company called China Communications Construction Company, which builds those artificial islands in the South China Sea that some people fear will turn that area into just a big Chinese lake. We know that the Pentagon is really concerned about this, and McKinsey obviously works for the Pentagon as well, And so there's

another contradiction there. Yeah, it's it's odd and I guess you know this has to do with the perspective that you take my guests would be and and you keep me honest here. The way they defend that is to say, we're a global company, We're not a US come I. We don't have anybody's particular interests in mind. We want to help the people who pay us to advance their their agenda, whatever that agenda is. That maybe so, but

I'm sorry. You know, if you're working for one client and the interests are opposed to another client, especially if that clients, you know, the US government, and if the work in Mackenzie's doing is in contradiction to national security, I think that's something that they called out. Okay, so other shocking stories, and we'll just touch on these. Mackenzie's

role in securitized debt. You know, this idea of turning debt into essentially a stock that other people can buy or a security that other people can buy to get debt off your books, which in many ways lead directly to the housing collapse and bankrupting at least tens, if not hundreds of thousands of Americans. They did of work at Purdue literally using the word turbo charging sales of

OxyContin in the middle of the opioid pandemic. It was obviously already clear that this was a problem when McKenzie stepped in and tried to help produce pharmacs sell more of this stuff. Which leads to the question that I have about this company, which is, is there a client you think they would not take on? Um? I am sure there are clients they would not take on. And you know, we don't hear about the clients they reject. McKenzie says, they actually turned down a lot of work.

I don't know what that work is specifically. Yeah, okay, So just to to round this up a little bit, I found myself as I read the book and listen

to all these stories, having a lot of thoughts about this. Mackenzie, in one way or another, has been at the scene of some of the most egregious examples of capitalism run a muck, and throughout the book you pointed out that in many cases the strongest criticism can from within, most often from young consultants who joined to make a positive and lasting change on the world, Like the Sign says, and we're shocked by what they discovered when they got in there. And you know, this is part of a

broader movement among young people who are demanding change. And I guess my question is, how do you think mackenzie stays relevant in that changing landscape and continues to win with talent. If you look at the mckensey website, you could be forgiven for thinking that they are the poster child for responsible capitalism, for ethical capitalism. It's all about

doing good, it's all about saving the planet. So on the surface, they seem like a very ethical company, but again, the work that makes them a lot of money oftentimes is in contradiction to their stated values as a company. Well, in addition to claiming to be purpose led themselves, they also claim to be helping clients make the transition to being purpose led today. It's a big way to make money, it's it is. Yeah, I just question their credentials. We

certainly do. But you know they can make a lot of money helping companies with their environmental these e s G goals or you know that that's that's a big way to make money. And so advises on this. Yeah, one other quick um area that I wanted to delve into. His values. They have numerous values and they all sound as values tend to really really great, But there are three that I wanted to probe on. The first is preserving client confidences. You know, their renowned for secrecy. They

claim that it's for their clients. But the other revealing thing about your book is that this policy of total secrecy has been incredibly profitable for them, and I guess my question is do you think that can endure? You know, secrets are just harder to keep these days, so do you think that policy is going to change. I don't think it's going to change. I think it's baked into mckenzy.

And some of that is legitimate tie because, for example, if they have trade secrets that they learned from a company, they can't reveal that, so they have to be trusted to keep those secrets. But it is becoming easier in some ways, you know, through lawsuits, through whistleblowers, through very idealistic young people who just they're not going to take it anymore and they want to work for an ethical company. So I do believe in you know that it does

depend though on continued attention by journalists. If there's not attention paid to these companies, then I think that secrecy and especially the malign aspects of that secrecy will continue. Another value observe high ethical standards. How are they doing here? Yeah, well I think, uh, you know, there's some there's some issues there. I guess the real question is one happens when this value contradicts either the secrecy value or the

firm's profitability. You know, lots of companies have values and mission statements, and usually they they're really meaningless, right. I do think mckensey is different. Um, they really take this stuff seriously. They you know that people are always talking about values at McKinsey. They have a Values Day, you know, they stand down and talk about values every year, and

you see it an email after email after email. The another value I'll have to say is that the right to dissent, the obligation to dissent if you see something wrong, you say something, and that that is a value that's invoked a lot, and that's helped us write our book because of these incredible emails that these young mckensey associates are writing, for example about their work with ICE, uh, you know, immigration and customs enforcement. And so there's that value.

But you know, kind of like with Lord of the Rings, where there's one ring, you know, that rules them all, one ring that binds them the the one value that is above all the other values is the client interests come first. Client interests come first. And but that's a If your client is a bad actor and you're working unstoppably to help, what is your responsibility then in the world,

right do you have none? I mean so so yes? Um. The obligation to keep your client confidences and to put the clients interests above the firms can lead you to basically doing things that, from a societal point of view, are just unethical. Yeah. Um, okay, here's a here's a really self serving question for you, Mike. You know, you're obviously a professional journalist, and we're obviously amateurs at calling bullshit.

We just follow our nose, and so far, our nose has led us to do individual episodes on Jewel, BP, Course, Civic, all of whom are mentioned in the book, and the FDA also in the book. And I was just blown away to discover that the common denominator between all of those entities is mckensey. What do you make of that? They're everywhere, They're they're absolutely everywhere. They work for all these companies, and they work for all these government agencies.

So if you scratch the surface at a lot of companies, you know, you'll discover mackensey. Was there another thing that I found myself thinking over and over again, how little I understood about the ways in which the world that we all live in today has been shaped by this one firm. And it's easy to really make up a fairly scary story about their impact by connecting a few dots.

If I told you the story, it would go kind of like, well, the relentless focus on helping corporations externalized cost like pollution, and also by downsizing and all shoring talent and advocating for executive pay has led to the climate crisis and also income inequality, as well as the destruction of the middle class, which leads to depression and anxiety in in the devastated middle class, and political polarization, which leads to the opioid crisis and the rise of authoritarianism.

So we can't blame McKenzie for this whole mess, of course, But maybe we got started on this because of the feeling that that McKenzie, you know, had a role in this. What so many McKenzie consultants and former consultants say, is that McKenzie is an accelerant. Several people who used that word, they're an accelerant. They didn't invent assets securitization, but they spread the gospel. They didn't invent offshoring, but they spread

the gospel. They didn't invent shareholder capitalism, but they spread the gospel. Yeah, I think that's that's a great point, and it's a great way to think about them, you know, for for better or worse. Okay, So just a reminder, mackenzie's purpose is to help create positive, enduring change in the world. And so Mike, if you you know, we're able to give them advice on how they could change to better live that purpose, what would you tell them? You know, I'm not a philosopher and I don't play

one on TV. But when you see unethical behavior, you know it. It doesn't take a genius to know that you shouldn't be working for a hospital to extract money out of poor people. You shouldn't be pushing opioids. You shouldn't be working for big tobacco. You shouldn't be working for the Saudi government to make them more sustainable, or

with Chinese government ministries. It doesn't take a genius. There are gray areas, of course, but they need to have a lot more of and I don't use this word a lot, but a lot more EQ a lot more emotional quote that they don't have that now. They're so focused on their spreadsheets and their slide decks than in so many cases they lose sight of the big picture and that's the purpose of their work and the ethics of their work. So they need to be much more

conscious about that. Mike, last question on this show. We have a tool, or to use a McKinsey ism, a technology called the B S scale to measure the gap between word. Indeed, it goes from zero to one hundred, zero being the best zero b s and one hundred being the worst total bs. So on that scale, how would you rate mckensey. So this goes against all the instincts as a journalist to give you this number, but but I'm gonna do it. I would have to give them a ninety. So they're they're way up there on

the BS. And you know, I think our whole book has been calling out the b s at mckensey. They do lots of great work, they have lots of great people. So many people at McKenzie I am their friends. I would you know. They're great people, but on such important, big issues around the world, they really fall short and it clashes so much with what they say in public on their website. Mike, thank you so much for being here today. This was an awesome conversation and thank you

for the work that you're doing. Please keep it up. Thank you very much. Time. It was a real pleasure, folks. It is time to make the call. Is mackenzie really creating positive and lasting change in the world? Based on what I've heard so far, I gotta call bullshit. If your purpose is to create positive, lasting change, then you have to help the world think long term rather than

continuing the fixation with the latest quarterly results. If you're going to create positive, lasting change in the world, you have to decide that there are good client dollars and there are bad client dollars, and you have to learn to say no to the bad client dollars. And if you want to create positive, lasting change, you have to have the courage to take a stand on issues that matter to the next generation of McKinsey consultants and McKenzie clients.

McKenzie has had multiple chances over the years, especially lately, to make some of these changes. So far they have completely failed. But as you know, we believe that bullshit is a treatable condition. So right after the break, we're going to talk with two x McKinsey consultants about actions the firm could take to turn things around. Stick with us, all right, folks. I am very excited to introduce today's experts,

both ex mckensey consultants, Rizwan Nave and Eric Edgstrom. We're going to help us help McKenzie to better live their stated purpose. Welcome to calling bullshit. Pleasure to be here. It's great to be here. So Rizonant, please tell us a little bit about your background, about your work at McKenzie and and also what made you decide to to leave the firm. I'm a professional with about a decade

of experience in the broader natural resources space. About half of that or five years at McKinsey, where I was a consultant and then an engagement manager in our Electric, Power and Natural Gas practice, which is a subgroup of our broader global energy and Materials group. My job at McKenzie as an engagement manager was to lead teams and work with the senior sea level leadership and board level

clients and the power and sustainability space. I've worked on both highly emitting and decarbonizing clients, but the latter part of my career I would say was almost exclusively focused on energy transition topics. At this point, maybe it's worth talking a little bit about the context around in my departure.

For myself, I try to work within paras line trajectory to articulate a different way to help these clients decarbonized into articulate that the firm should measure, disclose set and aspiration for reducing its client emissions and take steps gradually over time to calibrate such that it's edging this portfolio towards a Paris and line trajectory. I couldn't fully explain why we were running into leadership not giving us time or not fully engaging or various explanations as to why

this is complex and needs a second look. And after sort of months of being stuck in this, myself and a few other colleagues were quite motivated articulated in a letter to senior leadership that we need to do more on our client emissions that we carry immense risk as our clients irrevocably alter the Earth's environment with their emissions, and we, you know, open this to an audience inside the firm globally, We've got eleven signatures within a week,

I believe, and then suddenly the same folks who couldn't give us as much time were very attentive. Yeah, that's a huge number of people. Just contextually how many people work at Mackenzie I would say around thirty. That letter,

in functional terms also went nowhere. After months of this, you know, having seen the frankly very uninspirational response, I resigned and articulated in an email to senior leadership, copying the majority of our sustainability practice globally, where by I essentially laid out the case that we do have some responsibility.

If we take credit for our impact, we are also associated with the negative externalities of that impact, and we cannot profess to the world and shout to the rooftops that we are the greatest private sector catalyst for decarbonization globally while continuing to serve easily the worst polluters on the planet that are not on even on a trajectory and essentially resisting or I'll try refusing to institute even

the most basic modicum off measurement, disclosure, targets, setting and policies. Right, I think that context will be very helpful for people, and it's it's hard to argue with your logic. So, Eric, just as Raiswana has done, can you tell us a little bit about yourself and also the situation that you found yourself in that caused you decide to move on from the firm. So I grew up in Massachusetts and

my first career was in the military. I attended West Point and deployed to Direct Combat where I led troops in Kanadahar Province, Afghanistan, and after that was part of the Honor Guard, where I was the Presidential Escort platoon

leader during the Obama administration. From I realized that the military was not sort of the public service good, especially that particular mission, the War on Terror, since military service is not an absolute good, that I wanted to find a different way to apply myself to the you know,

my my vocation in the world. And so I attended Oxford and did a dual degree, doing an MBA in a Master science studying climate change, and I moved to Australia, so I joined McKenzie in and while I was there, I found that the projects that were available were not anything like what we're advertised, and rather than what you might see on a mckensey website which talks about vaccine, cold storage or renewable energy, that in practice is far

and few in between. The difference, of course, between sort of puffery of any business where they try to make themselves look like number one and we have the best flavor was very different with mckensey. You're you're actively saying that we're taking a very positive role and that they're hanging their hat on the notion that this is going

to be something that we're going to work on. And to set the stage, you know, we went on a firm off site to Port Douglas in the Great Barrier Reef and the consultants would go out for a day trip and go snorkeling to look at the coral reefs which were actively dying, and then they would return back to work where they would help increase extraction at a

thermal coal site. And I remember hearing people say stuff like well, at least you know, we got a chance to see it before it died out, and it was basically through our own work or the firm zone work rather that it was making the likelihood of a sustainable future ever harder to achieve. So that's sort of some of the stuff that I was passionate about, and you know, it was more than just the work and acknowledging that Mackenzie is an a moral institution. They're only doing what

earns the dollars. That's not necessarily a bad thing if they advertise themselves as such. Yeah, exactly. That's that's a key belief that we have on the show is it just needs to do what it says on the label, right, and and if you're transparent about just wanting to make money, we're fine with it. But it's when you say that your purpose is to help create positive, enduring change in the world, and then your activities belie another agenda. Absolutely.

So the apex of the experience of sort of descent within Mackenzie to try to realign the values of the firm. We're at Values Day in twenty nineteen, and so every year Mackenzie gets together to take you know, a hot wash, look at their values and say did we live them? This last year, where did we fall down, where did we come short? And what might we do to improve our values as a company, which is a great thing.

I was in the audience and the senior partner responsible for the Asia PAC practice for Australia New Zealand came up to the microphone and said, like, our values need to continue to evolve as the sort of atmosphere and what society expects of us continues to evolve. And he said something to the effect of we should no longer be serving clients that kill people or cheat their customers.

And I raised my hand and amongst an audience of five people, was like, how do you reconcile this with what we're doing with, for instance, the military, that these actions would be considered state terrorism. We're not legally at war with these countries that were actively bombing, and you know, I continue to serve these clients, and so I also you know that that didn't get me a lot of

UM positive attention, UM. And in my leaving email, I articulated these same arguments, not really seeing any client names, as I have not mentioned any client names in this discussion, and I was banned from the McKenzie Alumni network so this is a an act that I think has only happened to other people that were insider trading, for instance. So I had the same level of response for challenging McKenzie's client service record as would an insider trader, and

that seems counter to McKenzie's culture. I mean, my culture. Can I hop in there real quick? Of course, it's not discounter to the culture. The firm has a stated policy two policies. One is the obligation to dissent, this notion that if you are a dissenter, you're not only should feel supported to speak up, but you have an obligation to speak up, which I presume Eric felt. And then the second policy is, you know, this policy of

non retaliation, which also was not applied. And I think it's important to read the intentions in terms of the actions and entity takes and not in terms of what it says. In this case and in this case, uh, one can derive from the actions that you know the firm is not open to certain types of descent and does not see certain types of retaliation as inappropriate. That that tells you a lot about the actual culture of

the company. I appreciate both of those stories. A great deal, and our our take on on that kind of thing we call it bullshit, a gap between word indeed, and we also believe that that bullshit is a treatable condition, but it has to be addressed through action. And so that's what we heard it really today to talk about UM is to get into some ideas to bring mckensey's

actions more closely in line with its stated purpose. So I wonder if I could ask you, riz want to lead us off in in a couple of minutes or less, you know, what would you tell mckensey Global man partner Bob stern Fells or or other McKenzie leaders to change at McKenzie to better live their purpose, which is just to remind folks to help create positive, enduring change in the world. In my opinion, asking Bob, hey, you know

you should do these things, we already did that. So in my opinion, the question to ask really is what will society do? What will states and regulators do? Is just trust us going to cut it? Should privately own professional services firms be exempt from emissions measurement and disclosure just because of their choice of financing? The question is what will climate focused organizations do from the UN Climate

Compact and nonprofits? Are they willing to continue to engage the services of firms knowing full well that they have these contradictions and conflicts of interest in their portfolio? What will governments do? What will new hires do? So to Bob, I would say what market signals as you're waiting for what's more, surveys that show that this is the number one concern across alumni, current students, current employees with regards to client emissions? Is he waiting for a lawsuit? Will

that be too late? Like I would ask those questions because in my opinion, society needs to subject the firm to material consequences and disclosure and then the firm will be incentivized to act. So, to paraphrase, you were reply to this question, McKenzie isn't or can't fix itself and so others must fix it? Is that fair? I mean we can simply derive that from the actions they have taken thus far. Right. Okay, Um, that's bleak, But I understand why you would take that position given the story

that you've just told us. So fair enough, Eric, any thoughts about that? I mean, I think riz one is spot on that the firm is going to respond to the environment in which it exists. If it's no longer a profitable with the calculus that they do to continue serving these clients, they will stop doing it. And what are the costs? Well, the firm doesn't manufacture anything. Mackenzie doesn't produce any hardware. They rely on people to do

the work. If people stop showing up to apply to mckenzy and say, like, I want to work at a top tier consulting firm that isn't turbo charging the climate crisis, Bob will get the message right now. The the book that was released by the two New York Times reporters is effectively a reputational hand grenade, and they pulled the pin and they handed it back to Bob. He has decided to sit on it um. The question, now that the world knows some of the negative externalities that they multiply,

is what are they going to do about it. One of the quotes in the book from a former senior partner talked about it effectively being long term stupid to continue these practices. I mean, this is the thing. Mckensey is a business consultancy and it says it's looking to make enduring change in the world. So it has this long term view, but it's it's it's giving clients bad advice.

And when you're talking about being a great place to retain exceptional talent um if you ask any gen z R. Do you want to work at a company that knowingly is making the most important issue facing the planet worse? What are they going to do? So I I, you know, hope that this gets out to all those undergrads at Princeton and m I T and cal Tech and University

of Michigan and Georgia Tech. And when they're thinking about what they want to do, are they in the interview room going to ask that associate partner what are you guys doing about this? And are you continuing to serve these clients? They will get the message and they will change. Yeah, I agree, thank you for that. And Eric, just directly, would you do to fix mackenzie? What they will do

is respond to market forces. What I hope they do would be to fix themselves as you might um hope for as well, independently and separate for starters in a first responder sense, stop the bleeding, So stop serving clients on topics and This is the big distinction. It is not an objection to serving fossil fuels and coal companies. It is serving fossil fuels and coal companies on things that will make climate change worse. And that is the

distinction that needs to be pulled out. Of Bob's straw man fallacy that he published in the Wall Street Journal, premise which no journalist has the courage to look at, is that in his comment, the snug premise is like, we go to the extractive industries because that's where the benefits could be. The question within that is when you go to those science, what are you doing? And the answer to that question is very unsavory. And so that

is what needs to be pulled out. So stop the bleeding in the sense of stop serving clients that are, we know, on a four degree trajectory. Stop serving them on either a business as usual projects to help them enable that four degree strategy, or worse um have them do basically work that is turbo charging the problem and making it worse. I also want to make clear it's not that forces within the firm are not trying to

drive the change. There are many many people who struggle with this, who are advocating for the firm to do more on this. So I am hopeful that this disclosure, this attention provides them the fact base that they need to sort of progress things. Mckinseie does incredible mark helping clients de carbonize. We are I would say the sustainability practice quite specialized in that the question is can we can we continue to be able to do that with

knowing what we know? As reported in the Times, The points that riz One and I are making, if I can put words in his mouth, is that mckensey does a lot of good and there is a lot of stuff that is not inherently immoral. You know, if you look at if if you look at the portfolio of clients and the type of work that I would see coming across for projects, a lot of it is pretty hum drum corporate stuff. How do you improve second line

risk at a health insurance company? How do you offshore pet food to another country so they don't have to pay high taxes in this country. So there's a lot in the middle that's just this is just business work. But it is in some instances, whether we're talking about opioid makers, whether we're talking about turbo charging the climate crisis or helping the defense industry at times when the

wars in which they are fighting are indefensible. Uh, those are the topics that they should take a harder look at. So this isn't a wholesale you know, the consulting industry is broken completely, but there are aspects that are broken and it leads to really horrendous and dreadful second and third order consequences. All right, my turn, from the naive perspective of not having been in the belly of the beast, I I truly believe this that we are at an

inflection point in capitalism. And I think that the form of capitalism that we have practiced for you know, the last I don't know, five decades, I call predatory capitalism, but a gentler name for it would be shareholder capitalism. You know, this idea that the sole purpose of an organization is to enrich shareholders. That idea needs to go.

And I believe in a new form of capitalism that's now referred to sometimes as stakeholder capitalism, that acknowledges that, instead of existing exclusively to enriched shareholders, corporations actually exist to serve multiple stakeholders. Their employees, other members of their supply chain, the communities that they do business in, um as well as the planet and and I. It is just a fact that there is no company better position

to lead capitalism in this direction than McKenzie. Taking an optimistic point of view here, McKenzie has the biggest opportunity of the firm's existence sitting right in front of it to truly live its purpose and help all companies everywhere see that we are, like really at a turning point for humanity, and the challenges that corporations face today to make the changes needed to save all of us are really complicated and really difficult. Take for example, s an ability.

Just the task of remaking global supply chains to achieve a truly circular economy is work that no single company could possibly take on alone. No client can do that alone. So who would you call to do that work? Only a company like McKenzie could help its clients, you know, truly collaborate to take that on. And so let's imagine for a second world in which in which McKenzie pivots to taking responsibility for helping all companies everywhere actually make

this shift. That would be positive. It would certainly be enduring, and as both of you have pointed out right in the War for talent, Mackenzie would win hands down with that strategy. And the alternative is for Mackenzie to cynically continue to mouth the words about purpose and being purpose led while just continuing business as usual, helping companies maximize short term profitability. And that's definitely not positive and I

honestly don't think it's going to endure either. Thoughts on that, So, t I appreciate the framework, and I would say you're you're totally right right the sort of freedmanesque neoliberal era that we have lived through that has wrought the things that we see today. You know, I don't talk to many people who don't think that, you know, things are working really well and like, you know, stuff is awesome, everything, everything is awesome. And I don't talk to a lot

of people like that. I think the vast majority of people I speak to, you know, more or less understand that this this sort of system of incentives is not working. It leads to a lot of the externalities you've spoken about in this conversation, and you know, there's an awareness that is changing that said, I I take issue it's sort of adding prefixes to the word capitalism as that changing sort of the core structure of how we organize

our society. Right, capitalism is capitalism. It operates under a system of incentives. Until you ascribe the incentive is it cannot function. So to me, the question is what will create the structural incentives. I'll give it a specific example. There's quite a lot of bluster with regards to climate and sustainability. You've talked sensibly on your show about greenwashing. If you take, for example, the list of entities that have committed to a science based target, just count the

amount of fossil fuel companies. I think you wouldn't even get to ten. The vast pority of those companies are food, beverage and consumer companies. Why because consumers are far more aware and are creating the consequence where they're desiring this change. I think such consequences do not yet exist in a material fashion for fossil fuel industries. If, in fact, we see the opposite. You see the Ukraine War, you see Germany, that sunset, it's nuclear plants in after for Kushima now

repowering coal plants. You see, you know, record profits being posted by all and gas companies. In fact, I would say we're going in the opposite direction. Do we really expect a private sector professional services firm to go to the sea levels of hydrocarbon entities and to inform them that they should decarbonized when they are posting record profits? Do not see all the prices going down? And McKenzie or others entities like it, you know, have the chance

of making exceptional amounts of feast from such work. You're saying, my ideas is naive, and I acknowledge that. However, would you acknowledge that if McKenzie is in the business of trying to help actually save the oil companies and the coal companies that they are consulting for, that it would be better advice to begin a transition away from fossil fuels as fast as they possibly can, because it will take them a long time to get there, and we

don't have a long time. And the alternative is that government steps in and buys them, you know, essentially turns them into government utilities and then shut them down, right like or or do you think we're just going to spin off the edge of the cliff with capitalism running at full speed? Like what what is the alternative. I do believe that a combination is needed. Um. I think the private sector needs to see that eventually there are

things that they will have to contend with. So what position would they like to be in after those consequences have occurred, and after there is some level of accountability held, what side of the house would they like to be in. I am hopeful that with increased awareness there is some accountability, but in my opinion that accountability is highly unlikely to come from actors at the top that profit the most

from the status quo. I think that accountability is far more likely to come through the bottom, through employees sort of holding their leader's accountables, through public sector entities, through states, attorneys generals hold identities they work with accountable, through regulators, so on and so forth. I would also disagree in part with the framework that we should put the onus on business to make the changes that we need in

the world. They're not going to. And if you think about businesses as a bell curve of adoption, where there are some the frontier, you know, five percent of the company's let's just say, you know, the Patagonias of the world, they are actively making it part of their business model. It's also a type of good that is very visual and that people want to present to the world as I'm going to signal to you that this is what

I care about, therefore I buy this. Now, does that same person think about the installation that's in their home? You know, all of the other sort of hum drum goods that you're buying. Are those looked at with the same level of scrutiny and the answers not. And therefore those businesses and those industries are not incentivized to change as quickly as those that are more susceptible to not being purchased because of the way that things are made. So in the bell curve of adoption, you will get

the front runners who will change on their own. There will be others that will, you know, receive pressure because employees won't want to work for them because they care about these issues. But that's still probably isn't the majority, at least not now, and so if you're trying to rely on that framework to get the change that we

need in the world, it's going to fail. So, I mean, my perspective is that this is not a referendum on capitalism, and that McKenzie shouldn't be held up as it is good or bad, because whether or not we like Milton Friedman or not, it is that capitalism today does not accept and acknowledge negative externalities and those need to be priced in in order to achieve wholesale change. So that

is the carbon tax. You know, businesses that operates by omitting a lot of cars are been and don't want to spend the capex to completely overhaul their business are not incentivized to push that. And that's exactly what Rizwan was talking about. If you get in the room with someone who is not incentivized to make that change, will be very difficult to change them from the outside as a third party advisor. And so I mean, the the onus I believe is uh, you know, on government to

change the policies. If if McKenzie was as fearful of getting sued by Maura Healey and the Massachusetts State Attorney General as they as they were from the opioid crisis and paying over six million dollars for turbocharging opioid sales, if that same risk applied for climate change, they would change very quickly. So, in a long answer, the market does what the rules of the game allow them to do so. If you change the rules of the game, the companies that are playing in the game will also

change their behaviors. There are so many things I would love to ask you and continue this conversation. Has been a fantastic conversation, but I have to wrap up with one last question for both of you. Mackenzie says that its purpose is to help create positive, enduring change in the world. And we have a tool on this show called the BS Index. It goes from zero to a hundred, right, zero being the best, zero bs being the worst. Total BS. What score would each of you give Mackenzie, Eric, I'm

gonna ask you to go first. Well, I mean, Mackenzie loves a good twenty, so I'd give them an eight on this one. And the reason I would provide a

score of eighty is the asymmetry of the damage. It is again not denying that there is a tremendous amount of positive good that they have done and continue to do, but on these this particular topic where they've been serving the fossil fuel industry for reported seventy years, the magnitude of that damage far outweighs and outpaces the benefits that are provided to your local health insurance company or another financial institution. So to say that that is long term

positive um is hard to believe. Fair enough, thank you for that, Eric riz One. Well, if you read my email, you probably know the math. It's pretty similar to Eric's with regards to emissions. It's quite simple math. The six hundred sustainability projects that Bob coded in his Wall Street

Journal article. If you put those on one side, and the emissions they abated, and if you put the emissions that we have served even on the same time horizon, if we were to be charitable and then put the outlook forward looking for those entities and continue to serve them. And however many projects m cain see holds and sustainability, I would suspect any reasonable approach, any reasonable even the most charitable one, would show you the same outcome, probably

significantly worse. So what score does that lead to in your mind? I would love for the firm to do that accounting and tell the world what the score is and be honest about it here too. Here I'm unfortunately unable to say because I know exactly what that score is, right, But I mean, I'm asking you for a BS score for mckensey, like how big a bullshit or is mackensey when they say that they're out to create positive, enduring

change in the world. With all the due respect to my colleagues, particularly in the sustainability practice, who would like to see that, I would suspect that many of them in private would agree that it's a t percent bullshit. I'm very inspired by both of you and and I very much appreciate your coming on the show today. So thank you both for being here. Thank you Ti, Thank you Ty. I'd like to end the show by giving mackenzie an official bullshit score. McKenzie is saying their purpose

led and clearly are not. That's bad. They also claim to be in the business of helping other companies become purpose led. That's even worse because they're getting purpose so wrong, and because if they decided to get it right, they could do so much good. I'm giving mackenzie an that's the highest score we've given to date. To weigh in with your own score, visit our website Calling Bullshit podcast

dot com. We'll track McKenzie's behavior over time to see if they decide to bring that score down you'll also be able to see where Mackensey ranks on BS compared to the other companies and organizations we featured on the show and to global managing partner Bob Sternfeld's if you heard anything on this episode that you'd like to discuss further, you have an open invitation if you are starting a purpose led business or thinking of beginning the journey of

transformation to become one. Here are three things that you can take away from this episode. One, purpose matters. It's not marketing, it's not fluff. It's not a cynical way to trick young people into joining your business. Purpose is a key ingredient in driving a transition to a new and more sustainable global economy. It honestly hurts my heart that a company like Mackenzie is using the term so cynically.

Do not emulate them. Two, A principle isn't a principle until it costs you money, and being purpose led means you don't take money if it doesn't align with your purpose. Mackenzie has not gotten that memo, have you? And Three yeah worth repeating, don't talk it until you're willing to walk it. This is literally why we started this show saying it is so much easier than doing it, but saying it and not doing it is toxic to your

business and to the world. Don't do it. If this episode inspired you to create positive, lasting change in the world, subscribe to the Calling Bullshit Podcast on the I Heart Radio app, Apple Podcasts, or wherever you listen to people speak into your ears and friends. I'd like to ask for your help. If you enjoy the Calling Bullshit Podcast, please take a second to rate us on Apple Podcasts

or on your preferred platform. It helps more people find the show and thanks to our guests today New York Times journalist and co author of the new book When McKinsey Comes to Town, Mike Forsyth, and former McKinsey consultants Rizwan Navid and Eric Edstrom. Learn more about them and get links to their work in our show notes or at our webs right Calling Bullshit Podcast dot com. And thanks to our production team Hannah Beale, Amanda Ginsburg, d

s Moss Hailey, Pascalites, and Parker Silzer. Calling Bullshit was created by co Collective and it's hosted by me Ti Mounting You. Thanks for listening