The Big Con

Starred review from January 2, 2023
Multinational consultancies, including McKinsey & Co., Boston Consulting Group, and PwC, have co-opted government operations to suit their own business models, according to this immersive and exhaustive study by economists Mazzucato (Mission Economy) and Collington. Noting that the neoliberal “Third Way” embraced by leaders including Bill Clinton and Tony Blair held that governments should “steer more, row less,” Mazzucato and Collington show how public services came to be outsourced to private firms. Consultants and contractors won governments’ confidence by placing experienced public sector veterans in management roles and recruiting eager Ivy League grads to do the legwork. Dazzling PowerPoint presentations and quasi-academic in-house studies enhanced consulting firms’ credibility, despite such failures as the disastrous launch of the Affordable Care Act’s enrollment website, HealthCare.gov. Even more disturbing are studies suggesting that consultancies are actively working against the public interest by simultaneously serving fossil fuel companies while advising governments and corporations on their climate change policies. Among other direct and persuasive solutions, the authors suggest the enhancement of conflict of interest disclosure requirements and empowering public sector organizations “to take risks.” Doggedly researched and elegantly written, this is a fascinating entry point into a critical yet underreported issue.

February 15, 2023
Mazzucato and Collington (of the University College London Institute for Innovation and Public Purpose) offer a thoughtful analysis of the effects of exponential growth in the consulting industry over the past several decades. The title neatly encapsulates the major problems caused by the widespread use of consultants by corporations and governmental bodies. Examples span the globe, with a focus on the U.S. and UK. The book examines notable events such as the botched rollout of the healthcare.gov website during the implementation of the Affordable Care Act, the financial aftermath of Brexit in the UK, and the 2014 Puerto Rico bond downgrade. The authors make clear that the unique and often conflicted nature of the consultant-client relationship is central to these and countless other failures. Four specific proposals for breaking governments' and corporations' dependency on consulting firms are outlined in the book's conclusion. Written in a sophisticated but accessible voice, this would be an excellent addition to any business collection. It also serves as a much-needed counterbalance to books like Ethan M. Raisel's books The McKinsey Way (1999) and The McKinsey Mind (2001).

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March 1, 2023
Two respected researchers draw back the curtain to probe the consulting industry, and what they find is worrying. Mazzucato and Collington, academics connected to the Institute for Innovation and Public Purpose at the University College London, ask an interesting, important question: What is it that consultant firms are really selling? The answer seems to be confidence--the image that they know what they are doing, with a level of expertise and knowledge higher than that of the client. Or maybe it's more of a "confidence trick," a sleight of hand that provides huge profits for little actual assistance. The authors deeply examine the activities of the giant consulting companies, particularly McKinsey, Boston Consulting Group, Bain & Company, and the "Big Four" accounting firms. These corporations expanded massively in the 1980s and 1990s on the back of a neoliberal wave of privatization, outsourcing, and reorganization. While they present themselves as objective advisers, their proposals usually involve cuts to staff numbers and a focus on short-term gains. Mazzucato and Collington look at several cases where their advice turned out to be spectacularly, painfully wrong--although the consultants still walked away with fattened pockets. The authors point out that the expertise of consultants is often exaggerated and tends to be generalist rather than specialized. The use of consultants undercuts the development of intellectual capital within the client organization, resulting in problems that require more consultants to fix. In the concluding section, the authors give advice to anyone considering engaging consultants, such as first examining your own organization to see if the needed expertise is already available. Clear metrics to gauge success or failure should be incorporated into a contract, and research into the record of the consulting firm is invaluable. As the authors demonstrate, these are simple steps that could save a great deal of money, time and difficulty. A detailed and disturbing look at the consulting industry and its negative impacts on companies and governments.

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