The role of McKinsey and co has always been reputation laundering, not actual consulting.
Companies bring in McKinsey and pay the big bucks so that when something goes wrong or in unpopular they can point the finger and McKinsey. McKinsey consultants are paid to say the things that corporate leadership doesn't want to say.
The entire role of a consultant is the create theater to present the illusion that they are doing serious "business". Look how professional they are? If they get it wrong, then maybe nobody can get it right. Worst case we can shake our finger at them and frown, can you believe how they handled those layoffs? ... then call them back next month when it needs to be done again.
Everything goes right? Well, what great leadership this corporation has. Either way McKinsey gains a good reputation around other corporate leaders in need of these services.
AI is not replacing that particular service anytime soon.
Hehe, agreed. In Germany there is a saying that goes somewhat like this: "A consultant is a person you give your watch so that you can ask them for the time."
Don't forget cross-industry collusion. It can be illegal to form organized cartels, but it's totally fine to listen to what your consultant says, even if they got it by talking to their other clients.
> AI is not replacing that particular service anytime soon.
Fully agree, it's more likely that the outcome will be "We hired McKinsey, they now use some intelligent software to improve their analysis"
Everything else will result in "What do you mean, we paid you money to lead and you handed the destiny of the whole company to some generic software?!"
In my experience it is often subtly simpler than this.
Rising to the top of a company is rarely the meritocracy we'd like to think, (or, at least, the merit required to rise is different than the merit required to lead a company successfully). Often people rise to the top who don't want to make decisions, don't have a vision and very much are used to leading by consensus.
So there is not a masterful plan to avoid blame for the difficult thing they know they need to do, they just don't know what to do - they are incapable of making decisions.
>McKinsey consultants are paid to say the things that corporate leadership doesn't want to say.
>AI is not replacing that particular service anytime soon.
what are you talking about?! That is the prime service for AI to replace.
What, you don't like our decision!? But the AI says we should fire you all, can't argue with AI folks, it's super smart.
hell, they just need a ChatGPT template that makes screenshots that says what you want ChatGPT to say for you and they're good to go. They don't even really need to use the AI. McKinsey does not look good in a world of AI.
What a hot take! If you're in an organization where leadership 'points the finger' at McKinsey to cast blame for an unpopular decision, imagine what sorts of decisions they would have made without the consultants!
Consultants are hired to improve decision quality. They do that through a combination of analysis, experience, and industry connections. The work product is rarely 'powerpoints'. The work product is the actual work, which entails people doing research, making decisions, executing on them, and measuring results.
At any rate, I don't disagree with you that consultants aren't going anywhere. This post is an ad for an immature AI service that makes a bunch of claims about how they've solved for hallucinations and knowledge cutoffs in order to take down McKinsey. If they had solves for those problems, they'd be wasting their effort building a replacement for consulting firms.
I'm sorry but how does a fresh out of college senior consultant gain such amazing experience?
I've been unfortunate enough to work with 3/4 of the big four (senior enough to at the table, not senior enough to call bullshit). Sales pitch is all partners; older people, lots of industry experience in relevant areas, great pitch. But, come time to deliver and an early 20-something shows up. So either its all covering your ass, or its just recycling reports from a shelf, either way there's no experience involved
>The role of McKinsey and co has always been reputation laundering, not actual consulting.
Reminds me of why companies choose penetration testing services/audits from some specific well known companies, but also only want to pay for the bare minimum amount of testing. They want the reputation of the label that they passed an audit from X company, they don't actually care about their security.
>McKinsey consultants are paid to say the things that corporate leadership doesn't want to say.
More like they're paid to say the things corporate leadership doesn't want to hear from its own employees. They already know it, but they just pay McK to have external confirmation, to reinforce what they already know.
The reason why so many people believe this is because they have directly experienced situations where these consultants come in, understand less than the people who work there, and do a below-average job. It’s the idea that these consultants are hired for their capabilities that doesn’t hold up to scrutiny.
I understand where you are coming from. Here you have two misaligned incentives.
You have people making coming from the outside, making decisions that would affect rank and file in a company. I think its natural for the rank and file to be biased towards believing in their own skills and dismissing outsiders.
Why would shareholders, the board and the CEO waste so much money on paying consultancies when the only value is being able to pass blame? Isn't it simply easier to believe that consultancies indeed provide valuable judgements and the price paid is worth it?
Accountability sinks is the buzzword we are looking at here.
It's to do something that is not easy to do in an organization due to major breaks in the current status quo.
The risk of doing one thing and complaints hampering the progress there is often too high which is why you give authority to a third party who will just do it regardless of feedback. One time breaks are necessary sometimes but can also be misused a lot for things employees want to do anyway. It's up to leadership to identify what is necessary and not generally possible with the current crew.
> Why would shareholders, the board and the CEO waste so much money on paying consultancies when the only value is being able to pass blame?
Management does it in large part to provide external validation (most importantly to the board and shareholders) of the decisions they sought to take anyway.
The board and shareholders accept it because the external validation works exactly the way management intends it to. (There's also cases where using independent consultants as part of some process is a compliance checkbox thing, and in those cases they are used for that specific reason.)
You are assuming that decisions to hire consultants are driven by merit alone, that the outcome invariably matches what was desired, and dismissing any experience to the contrary as sour grapes. None of this is reasonable.
Please understand that I'm literally debating against a conspiracy theory. Sure some times they are not hired for merit but do you think all this is a pyramid scheme where massive amounts of money are wasted for no real value?
Or that they were hired by former mcKinsey consultants turned executives.
That’s the most egregious part imho, how when consultants get fired, the firm gives all the help it can so they can land a good job in a decision-making role at a potential client.
Have you heard of any company working as hard as mcKinsey, bcg, etc to help people they just fired?
This is not true factually and not true simply because you need the best person to do the job. Why would I hire an inferior candidate when I can hire a much better one that will make the company grow and make me wealthy as a consequence?
> Why would I hire an inferior candidate when I can hire a much better one that will make the company grow and make me wealthy as a consequence?
There are plenty of reasons why an individual's goals aren't aligned with the org they're in. The larger the org, the more reasons there are.
For instance, you could be looking for loyal allies, rather than competent competitors. Or you could be looking for someone that will just repeat what you say as an exterior pov, rather than do "the best work" and potentially contradict you in front of your superiors. Or you could be looking for someone to take the fall for a botched project of yours. Or you could be looking to hire a relative or a friend of your boss in order to curry their favour. There are plenty more.
As for the relation between making the company healthy and profitable and having a successful carreer ; except for founders and a few early employees, it's usually more profitable to look for individual advancement within the company (promotions, raises, etc) rather than to expect the company's growth to benefit you.
Of course, employees are supposed to have some deontology, but you can't expect that all employees in a company fit that ideal.
> Many McKinsey go on to be executives in companies
Many, nay most, executives at companies couldn't run a lemonade stand. In the real world having the job title doesn't mean they have any skills or judgement let alone those required to drive companies.
I really don't want to be a conspiracy theorist, but it honestly feels like a pyramid scheme. The MBAs/consultants help out the MBAs/consultants. Their effectiveness isn't super important. It's very rare I see a coworker who is actually effective get promoted––it's always the ones who are loudest, steal credit from others, and who are really social/fun to be around.
Because as soon as you're 2-3 levels up it's all politics, no content. All information comes from people who know better than you. All execution is done by people who are better at what the company does than you are. The "base" level of playing politics, the table stakes, is to never get blamed. And there's regular fuckups who need guilty parties. Look up the 3 envelopes parable.
Let's put it this way: consultants provide a new envelope every 6 months or so.
> Isn’t it just much simpler to accept that they indeed provide value in making good judgements?
I have hard time to accept that one, because there is little evidence of them providing good value judgements. They come in and leave companies in disordered state. I have not seen or heard of them come and fix stuff.
And from what I have seen, they do not have processes or knowledge to not create mess. Their actual changes are made by people who have very little experience and whose experience is limited to being parachuted somewhere and leaving in few months. Otherwise said, they do not even know impact of what they do.
Strategic consulting is never about knowledge. It’s all about personal relationships and having another external company to blame for all important decisions. Nobody gets fired for hiring IBM. Or whatever sh*t company.
This seems like an advertisement for Xavier AI which is okay but anyone reading this should be skeptical of even the possibility of replacing judgement calls with AI.
AI _can_ help you create dashboards, analyse data and help with reports. AI can't realistically replace good taste. A good taste involves experience and a person's ideology - their prediction towards how things will play out in the future. This will be the biggest skill differentiator in a time where getting unambiguous things done can be oneshotted.
Consultancies will still exist because people with good taste exist.
I'd trust the output of this model just as little as I'd trust anything produced by McKinsey or its ilk, so sure. But clearly I'm not the target audience...
If your new strategy fails, it is easier to CYA by pointing at McKinsey / Bain / BCG, who came up with said strategy. After all, those are the elite firms you hired - and if they were wrong, who would possibly have been right, and foreseen it?
If you put the blame on some AI model/service, you'll own it.
The course notes for MITs Statistics For Applications are online, so you can learn all you need to know what you need and to write the right prompts! Right?
Queue the cynical takes on reputation laundering/taking the blame and personal relationships.
While possible, surely we can all agree then when a large business is trying to pivot/explore a new field, it does not necessarily have in-house talent to make that work, nor does it actually have technical/business/operational knowledge on how to make that work. Even for something as simple (to us) as making a new app for example, do you really think they can just hire a bunch of freelancers or even a specialized app dev shop and that would work? You need people who have done this before to manage that work, and McKinsey is a safe option to pick.
It's almost a trope at this point saying the knowledge they offer is useless but you clearly overestimate the knowledge big orgs have/have actionable access to.
The role of McKinsey and co has always been reputation laundering, not actual consulting.
Companies bring in McKinsey and pay the big bucks so that when something goes wrong or in unpopular they can point the finger and McKinsey. McKinsey consultants are paid to say the things that corporate leadership doesn't want to say.
The entire role of a consultant is the create theater to present the illusion that they are doing serious "business". Look how professional they are? If they get it wrong, then maybe nobody can get it right. Worst case we can shake our finger at them and frown, can you believe how they handled those layoffs? ... then call them back next month when it needs to be done again.
Everything goes right? Well, what great leadership this corporation has. Either way McKinsey gains a good reputation around other corporate leaders in need of these services.
AI is not replacing that particular service anytime soon.
Hehe, agreed. In Germany there is a saying that goes somewhat like this: "A consultant is a person you give your watch so that you can ask them for the time."
Don't forget cross-industry collusion. It can be illegal to form organized cartels, but it's totally fine to listen to what your consultant says, even if they got it by talking to their other clients.
This must still be legally considered collusion, right? Maybe it’s not totally fine but it’s so hard to prove that they go ahead and do it anyway?
> AI is not replacing that particular service anytime soon.
Fully agree, it's more likely that the outcome will be "We hired McKinsey, they now use some intelligent software to improve their analysis"
Everything else will result in "What do you mean, we paid you money to lead and you handed the destiny of the whole company to some generic software?!"
Scott Adams has a hilarious way to describe consultants thay says something similar: https://youtu.be/Ag9mo58sxbQ?t=2822
In my experience it is often subtly simpler than this.
Rising to the top of a company is rarely the meritocracy we'd like to think, (or, at least, the merit required to rise is different than the merit required to lead a company successfully). Often people rise to the top who don't want to make decisions, don't have a vision and very much are used to leading by consensus.
So there is not a masterful plan to avoid blame for the difficult thing they know they need to do, they just don't know what to do - they are incapable of making decisions.
>McKinsey consultants are paid to say the things that corporate leadership doesn't want to say.
>AI is not replacing that particular service anytime soon.
what are you talking about?! That is the prime service for AI to replace.
What, you don't like our decision!? But the AI says we should fire you all, can't argue with AI folks, it's super smart.
hell, they just need a ChatGPT template that makes screenshots that says what you want ChatGPT to say for you and they're good to go. They don't even really need to use the AI. McKinsey does not look good in a world of AI.
What a hot take! If you're in an organization where leadership 'points the finger' at McKinsey to cast blame for an unpopular decision, imagine what sorts of decisions they would have made without the consultants!
Consultants are hired to improve decision quality. They do that through a combination of analysis, experience, and industry connections. The work product is rarely 'powerpoints'. The work product is the actual work, which entails people doing research, making decisions, executing on them, and measuring results.
At any rate, I don't disagree with you that consultants aren't going anywhere. This post is an ad for an immature AI service that makes a bunch of claims about how they've solved for hallucinations and knowledge cutoffs in order to take down McKinsey. If they had solves for those problems, they'd be wasting their effort building a replacement for consulting firms.
I'm sorry but how does a fresh out of college senior consultant gain such amazing experience?
I've been unfortunate enough to work with 3/4 of the big four (senior enough to at the table, not senior enough to call bullshit). Sales pitch is all partners; older people, lots of industry experience in relevant areas, great pitch. But, come time to deliver and an early 20-something shows up. So either its all covering your ass, or its just recycling reports from a shelf, either way there's no experience involved
Came here to say this. Management already knows what needs to be done.
>The role of McKinsey and co has always been reputation laundering, not actual consulting.
Reminds me of why companies choose penetration testing services/audits from some specific well known companies, but also only want to pay for the bare minimum amount of testing. They want the reputation of the label that they passed an audit from X company, they don't actually care about their security.
>McKinsey consultants are paid to say the things that corporate leadership doesn't want to say.
More like they're paid to say the things corporate leadership doesn't want to hear from its own employees. They already know it, but they just pay McK to have external confirmation, to reinforce what they already know.
This seems like an often repeated myth but it doesn’t hold up to scrutiny.
Isn’t it just much simpler to accept that they indeed provide value in making good judgements? Instead of this more contrived explanation.
Many McKinsey go on to be executives in companies which means they had - at some point - the skills or judgement required to drive companies.
The reason why so many people believe this is because they have directly experienced situations where these consultants come in, understand less than the people who work there, and do a below-average job. It’s the idea that these consultants are hired for their capabilities that doesn’t hold up to scrutiny.
I understand where you are coming from. Here you have two misaligned incentives.
You have people making coming from the outside, making decisions that would affect rank and file in a company. I think its natural for the rank and file to be biased towards believing in their own skills and dismissing outsiders.
Why would shareholders, the board and the CEO waste so much money on paying consultancies when the only value is being able to pass blame? Isn't it simply easier to believe that consultancies indeed provide valuable judgements and the price paid is worth it?
Accountability sinks is the buzzword we are looking at here. It's to do something that is not easy to do in an organization due to major breaks in the current status quo.
The risk of doing one thing and complaints hampering the progress there is often too high which is why you give authority to a third party who will just do it regardless of feedback. One time breaks are necessary sometimes but can also be misused a lot for things employees want to do anyway. It's up to leadership to identify what is necessary and not generally possible with the current crew.
This doesn’t check out. The org hierarchy exists and accountability is placed at the right level in the hierarchy.
> Why would shareholders, the board and the CEO waste so much money on paying consultancies when the only value is being able to pass blame?
Management does it in large part to provide external validation (most importantly to the board and shareholders) of the decisions they sought to take anyway.
The board and shareholders accept it because the external validation works exactly the way management intends it to. (There's also cases where using independent consultants as part of some process is a compliance checkbox thing, and in those cases they are used for that specific reason.)
You are assuming that decisions to hire consultants are driven by merit alone, that the outcome invariably matches what was desired, and dismissing any experience to the contrary as sour grapes. None of this is reasonable.
Please understand that I'm literally debating against a conspiracy theory. Sure some times they are not hired for merit but do you think all this is a pyramid scheme where massive amounts of money are wasted for no real value?
I'm the unreasonable one?
> I'm literally debating against a conspiracy theory.
You’re debating against things people have directly experienced for themselves. You asked:
> Isn’t it just much simpler to accept that they indeed provide value in making good judgements?
It is not simpler to accept that when you have seen with your own two eyes multiple cases where they definitely were not making good judgements.
Or that they were hired by former mcKinsey consultants turned executives.
That’s the most egregious part imho, how when consultants get fired, the firm gives all the help it can so they can land a good job in a decision-making role at a potential client.
Have you heard of any company working as hard as mcKinsey, bcg, etc to help people they just fired?
This is not true factually and not true simply because you need the best person to do the job. Why would I hire an inferior candidate when I can hire a much better one that will make the company grow and make me wealthy as a consequence?
> Why would I hire an inferior candidate when I can hire a much better one that will make the company grow and make me wealthy as a consequence?
There are plenty of reasons why an individual's goals aren't aligned with the org they're in. The larger the org, the more reasons there are.
For instance, you could be looking for loyal allies, rather than competent competitors. Or you could be looking for someone that will just repeat what you say as an exterior pov, rather than do "the best work" and potentially contradict you in front of your superiors. Or you could be looking for someone to take the fall for a botched project of yours. Or you could be looking to hire a relative or a friend of your boss in order to curry their favour. There are plenty more.
As for the relation between making the company healthy and profitable and having a successful carreer ; except for founders and a few early employees, it's usually more profitable to look for individual advancement within the company (promotions, raises, etc) rather than to expect the company's growth to benefit you.
Of course, employees are supposed to have some deontology, but you can't expect that all employees in a company fit that ideal.
> Many McKinsey go on to be executives in companies
Many, nay most, executives at companies couldn't run a lemonade stand. In the real world having the job title doesn't mean they have any skills or judgement let alone those required to drive companies.
This is incredibly naive.
I really don't want to be a conspiracy theorist, but it honestly feels like a pyramid scheme. The MBAs/consultants help out the MBAs/consultants. Their effectiveness isn't super important. It's very rare I see a coworker who is actually effective get promoted––it's always the ones who are loudest, steal credit from others, and who are really social/fun to be around.
Why would shareholders and board agree to pay massive amounts of money for such a minimal value - the ability to pass blame?
Because as soon as you're 2-3 levels up it's all politics, no content. All information comes from people who know better than you. All execution is done by people who are better at what the company does than you are. The "base" level of playing politics, the table stakes, is to never get blamed. And there's regular fuckups who need guilty parties. Look up the 3 envelopes parable.
Let's put it this way: consultants provide a new envelope every 6 months or so.
> Isn’t it just much simpler to accept that they indeed provide value in making good judgements?
I have hard time to accept that one, because there is little evidence of them providing good value judgements. They come in and leave companies in disordered state. I have not seen or heard of them come and fix stuff.
And from what I have seen, they do not have processes or knowledge to not create mess. Their actual changes are made by people who have very little experience and whose experience is limited to being parachuted somewhere and leaving in few months. Otherwise said, they do not even know impact of what they do.
> Unlike conventional large language models prone to hallucination, these new systems leverage dynamic multi-method generation (DMG),
The only search results for this term are this article and promotional things for this company getting funded (Xavier)
Let me guess, it involves giving a bunch of different LLMs the same inputs, and picking the best output?
Probably they feed the outputs into another LLM.
Quick, patent it, save the prompt, that's golden IP right there.
Strategic consulting is never about knowledge. It’s all about personal relationships and having another external company to blame for all important decisions. Nobody gets fired for hiring IBM. Or whatever sh*t company.
This seems like an advertisement for Xavier AI which is okay but anyone reading this should be skeptical of even the possibility of replacing judgement calls with AI.
AI _can_ help you create dashboards, analyse data and help with reports. AI can't realistically replace good taste. A good taste involves experience and a person's ideology - their prediction towards how things will play out in the future. This will be the biggest skill differentiator in a time where getting unambiguous things done can be oneshotted.
Consultancies will still exist because people with good taste exist.
I'd trust the output of this model just as little as I'd trust anything produced by McKinsey or its ilk, so sure. But clearly I'm not the target audience...
Insofar as this is true, it confirms that the consultancies only exist to provide cover for decisions already made.
If your new strategy fails, it is easier to CYA by pointing at McKinsey / Bain / BCG, who came up with said strategy. After all, those are the elite firms you hired - and if they were wrong, who would possibly have been right, and foreseen it?
If you put the blame on some AI model/service, you'll own it.
The course notes for MITs Statistics For Applications are online, so you can learn all you need to know what you need and to write the right prompts! Right?
Consultants prove their value in knowing which screw needs to be tightened, not in tightening the screws. (https://calvincorreli.com/blog/1397-knowing-which-screw-to-t...) LLMs won't replace that until they can guide a complete novice to the answer.
I don't see anything here that I have not read elsewhere in the last year or so. And the language reminded me of the guys from Wankernomics.
Consultants are paid to say what management doesn't want to be caught saying.
but can your models make slides as fancy as mckinsey's
It'll be interesting to see how this fares when nobody up or down the stack actually knows anything.
Likely the same way as consultancies - rank up money, create a mess, blame everyone down the ranks and then leave.
Queue the cynical takes on reputation laundering/taking the blame and personal relationships.
While possible, surely we can all agree then when a large business is trying to pivot/explore a new field, it does not necessarily have in-house talent to make that work, nor does it actually have technical/business/operational knowledge on how to make that work. Even for something as simple (to us) as making a new app for example, do you really think they can just hire a bunch of freelancers or even a specialized app dev shop and that would work? You need people who have done this before to manage that work, and McKinsey is a safe option to pick.
It's almost a trope at this point saying the knowledge they offer is useless but you clearly overestimate the knowledge big orgs have/have actionable access to.