0:00

Hey, folks, I want to take a minute to

0:02

ask for your help. This show

0:04

is a labor of love for all of us here

0:06

on the team at calling BS. We

0:09

debate which organizations to investigate.

0:11

We carefully consider how to best

0:14

tell these stories. Our goal is

0:16

to create a show that exposes purpose washing

0:18

and the real harm it does in the world. But

0:21

we also want to create a show that's fun to listen

0:23

to and serves as a practical guide

0:25

for entrepreneurs and leadership teams

0:28

about how to do purpose right. We're

0:31

really proud of what we've made so far, and

0:33

we're super excited about getting season

0:36

three into production so we can share it with all

0:38

of you now to the help we need.

0:41

So far, we are self

0:43

funded. We need a sponsor

0:45

or sponsors to help us with the cost

0:47

of production. But, and this

0:50

is important, we feel like it would

0:52

be disingenuous given the theme of the

0:54

show to accept money from just anybody.

0:57

It's important to us that the sponsors of this show

0:59

shared of shows values. We're

1:02

looking for partners who are purpose lead themselves,

1:05

Companies or organizations that truly walk

1:07

their talk. Companies who understand

1:09

the harm that purpose washing does and

1:11

who understand how important it is for all

1:14

of us that more companies embrace

1:16

the path to purpose. If

1:19

you're a part of an organization like that, or

1:21

you know one that seems like a good fit, don't

1:23

hesitate to drop us a line. You can

1:26

reach me directly at Team Montague at Calling

1:28

Bullshit podcast dot com.

1:30

Thanks for listening, and let's get on with the show.

1:46

McKenzie the

1:48

enigmatic global consulting firm.

1:52

Their influence unrivaled,

1:56

their talent extraordinary,

2:00

their allure irresistible,

2:04

their bullshit undetected

2:09

until now. Welcome

2:15

to Calling Bullshit, the podcast

2:17

about purpose washing, the gap

2:20

between what an organization says they

2:22

stand for and what they actually do

2:25

and what they would need to change to practice

2:27

what they preach. I'm your host, Time

2:29

Montog You and I've spent over a decade

2:31

helping organizations define what they stand

2:34

for, their purpose and then

2:36

help them to use that purpose to drive

2:38

transformation throughout their business. Unfortunately,

2:42

at a lot of institutions today, there's

2:44

still a pretty wide gap between word

2:46

and deed. That gap has a name,

2:49

bullshit. But, and

2:51

this is important, we believe that bullshit

2:53

is a treatable condition. So

2:55

when our bullshit detector lights up. We're

2:58

going to explore rethink the organization

3:01

should do to fix it. The

3:14

campaign that Purdue launched when

3:16

it put oxy content on the market was designed

3:19

to make doctors I think that

3:21

hoping it's rarely cause addiction. Now

3:24

dozens of states and cities to filed lawsuits

3:27

accusing Purdue of helping fuel the current

3:29

health crisis with misleading marketing.

3:31

I can't remember last time the FDA was

3:34

a friend or or the spark for

3:36

a rally for some of the tobacco stocks,

3:38

But that's what we saw yesterday and

3:40

Run ultimately filed for bankruptcy. Approximately

3:43

twenty jobs and two billion dollars

3:45

in employee retirement funds were lost. Many

3:48

executives were brought to justice, and

3:50

some of them ultimately ended up receiving

3:52

prison sentences. Many

3:54

Americans are struggling and barely

3:57

getting by, but not everyone.

4:00

Into the Economic Policy Institute,

4:02

American CEOs were paid three

4:04

hundred and fifty one times as much

4:07

as a typical worker. The Department of Homeland

4:09

Security has redirected hundreds of

4:11

millions of dollars to immigration enforcement,

4:14

growing the size and scope of ICE.

4:16

The government has pulled money that was supposed to

4:18

be spent on the Coast Guard, on t s

4:20

A aviation security, and on FEMA

4:23

hurricane relief. The U S Intelligence

4:25

report has concluded that Saudi

4:27

Crown Prince Mohammed bin Salmon personally

4:30

approved the murder of the exiled journalist

4:33

Jamaica and

4:37

Ron, the Immigration and Customs

4:40

Enforcement Agency a k a ICE,

4:43

Big Tobacco, the f d A,

4:46

Perdue Pharma, Big

4:48

oil, and the Saudi Arabian

4:51

government. What's the thread

4:53

that connects all of these controversial

4:55

organizations, governments and industries. They

4:58

have all been clients of

5:01

Mackenzie. Coincidence,

5:04

bad luck, or is there something

5:06

about Mackenzie that draws them

5:08

into these dark corners of capitalism?

5:14

The story of McKenzie and the story of global

5:16

capitalism are inextricably

5:18

linked. The firm consults with

5:21

heads of state, boards of directors,

5:23

and CEOs of most, if

5:25

not all, of the most powerful

5:28

corporations and countries on the planet.

5:31

You'd be forgiven for not knowing much about Mackenzie.

5:34

Secrecy is a precious organizational

5:37

currency. Few people outside

5:39

the firm have a clear idea of the full

5:41

scope of their activities. Few

5:43

people inside the firm know the

5:46

full scope either. What

5:48

is common knowledge is that for the

5:50

past hundred years, McKenzie

5:52

recruits elite talent from only the

5:54

top tier universities. Mackenzie

5:58

also sells these recruits. It's on the idea

6:00

of wealth without guilt. To

6:03

the young, gifted, and ambitious,

6:06

a job at McKenzie is the ultimate

6:08

initiation into success, with

6:11

alumni currently holding high positions

6:13

in government, as well as running

6:15

companies like Google, Morgan Stanley,

6:18

JP, Morgan Chase, IBM, Disney,

6:21

and Boeing, to name just a few.

6:27

They claim to be a values driven firm.

6:30

Values like practicing high

6:32

ethical standards, having

6:34

an obligation to dissent,

6:38

maintaining an independent perspective,

6:40

and above all, serving the client

6:43

first. If you were

6:45

to visit their website, you'd see they

6:47

claim to be a purpose led company.

6:51

Their purpose to create positive,

6:53

lasting change in the world, although

6:56

that purpose is a little vague. As

6:58

you listen to this story on old you'll

7:00

begin to realize as I did, that

7:03

because of their power to accelerate

7:05

the adoption of new ideas across

7:07

their client base, there is no

7:10

company better positioned to create

7:12

positive, lasting change to the system

7:14

of capitalism than McKenzie.

7:18

So do their deeds

7:20

back up their words. Does

7:22

their value of serving the client first

7:25

mean that every other value comes second?

7:28

Can we trust any company to be purpose

7:31

led when they operate in almost

7:33

total secrecy? Flip

7:35

on your BS detectors, folks, and join

7:38

me as I talk with three people who

7:40

are deeply qualified to help us discover

7:42

the truth behind these questions and

7:44

more. A New York Times investigative

7:47

journalist and co author of the new book

7:49

When McKinsey Comes to Town, followed

7:52

by two former McKinsey consultants

7:55

who have worked inside the belly

7:57

of the beast. Folks,

8:04

I am very excited to welcome

8:06

New York Times journalist and author

8:09

Mike Forsyth. Mike, thank

8:11

you for being here today, and welcome

8:14

to calling bullshit. I'm so

8:16

happy to be here. Ti. So, you and

8:18

your co author, Wolf Buck Danich have written

8:20

a fascinating book about Mackenzie,

8:23

which I found both

8:25

fascinating and honestly a little bit scary.

8:28

What what moved you to write about this

8:30

topic? So all credit goes to

8:33

uh my co author Wald Buck dani He

8:36

started looking at Mackenzie back

8:38

in because

8:41

he saw that Mackenzie's work was

8:43

contributing to inequality and

8:46

was it was such a powerful secretive firm.

8:48

So he was pitching two editors back then, let's

8:50

write about this firm. Our first bite

8:53

of the apple in was

8:56

about mackenzie's work in South Africa.

8:59

But in that story we also mentioned a little bit

9:01

about McKenzie's work with ice. That

9:03

led to, you know, another chain of events,

9:06

and we just kept writing and writing,

9:08

and we just kept writing. How

9:10

would you describe what

9:12

McKenzie does. So they're

9:15

a management consulting company, so

9:17

more than thirty thousand people started

9:19

in the US, but actually most of their employees

9:22

are outside of the US. Now, when you

9:24

say a management consulting company,

9:26

they work for the C suite, the CEO,

9:28

CFOs, CEOs, and a

9:31

lot of the time their work is garden variety

9:33

cost cutting recommendations. That's what they're known

9:35

for, probably the best. You know, they're the people

9:38

you fear when they come in and they figure

9:40

out where jobs need to be cut,

9:42

you know. So there's the efficiency experts,

9:45

the efficiency experts, and they have been for they've

9:47

been around for nearly a hundred years and they've always

9:49

been the efficiency experts. But they do

9:51

a lot more than that, uh, you

9:53

know, they they help with refocusing

9:56

companies focusing on new lines

9:58

of business. They help governments reorganized

10:01

departments such as the FDA for example.

10:04

Uh And they also, I think, and this

10:06

is really important. Over the decades,

10:08

and especially since the nineteen eighties, they

10:10

have been big propagators of ideas

10:13

around the world, diffusers of knowledge,

10:16

so they are very powerful propagators

10:18

of information. Yeah, they're almost like the

10:21

global nervous system

10:23

for the business community, right like they

10:26

are the behind the scenes transmitter

10:28

of vital information. McKenzie

10:31

is an almost mythic brand

10:33

in consulting. They have a reputation

10:35

for being incredibly

10:38

smart, extremely effective, and

10:40

intensely secretive. My

10:44

first question here really is how did you get

10:46

the access that you needed

10:48

to even tell this story. There's

10:50

a lot of ways we did it. One thing that surprised

10:53

us early on was people

10:55

coming to us working

10:58

at McKinsey or had just left McKinsey to

11:00

tell their stories. And it

11:02

took a while, but we realized why

11:05

because mackenzie is such a different

11:07

company from like say Goldman Sachs or

11:09

some private equity company,

11:11

where you know, there's no pretense when

11:13

you work there, You're there to earn money, you're

11:16

there to be part of unfettered capitalism

11:18

if you're at Goldman Sachs, right.

11:20

But at Mackenzie, they lure very

11:23

idealistic, very intelligent people

11:25

into the company. Their recruiting pitch

11:28

is all about making a difference, and

11:30

they talk inevitably

11:32

in their recruiting pitches talking about things

11:34

you could do to make the world better, you know, with climate

11:37

or you know, with health, things like that.

11:39

And it's because of that

11:42

that people when they got there,

11:44

realized they've been sold a bill of goods, and

11:47

they came to us, and some of them came

11:49

with some extraordinary information. And

11:51

this didn't surprise me, to be honest, because

11:55

Mackenzie does use that technique of

11:57

trying to trying

11:59

to rude people who really want

12:01

to make a positive impact on the world, and they

12:03

recruit from some of the best schools around

12:06

the world. A large group of

12:08

people both inside the company

12:10

today and also people who have left

12:12

the company who feel some loyalty

12:14

to it, right they joined it for the right reason.

12:16

They want to kind of protect it. You know. The impression

12:19

I get from your book is many of them hate

12:21

seeing when the company gets

12:24

involved in unsavory things

12:26

or things that are, you know, they know are going to

12:28

damage the brand. It almost feels like they come to

12:30

McKenzie's defense sometimes

12:33

some people. The more senior

12:35

the people are, the more they come to mckensey's

12:37

defense, it seems. Uh. And it's

12:39

the younger people that you know, haven't spent

12:41

their whole lives there are that the prime of their

12:44

lives there who can move on and

12:46

do other things that are more likely to

12:48

come to us. So it's true. I think

12:50

the majority of the whistleblowers we

12:52

had are the really good sources we had were

12:55

on the younger side. Yeah,

12:57

And it was over and over again in the book that the young

12:59

can Sultan's kind of rose up when

13:01

there was, you know, malfeasance of

13:04

of one kind or another. It's

13:06

it's good to see that there are internal

13:08

checks and balances as well. So

13:11

you touched on this, but I want to dig a little bit deeper.

13:13

The company also claims

13:15

to be purpose let itself and

13:18

they say their purpose is to create positive,

13:21

enduring change in the world. And

13:23

so right out of the gate, what do you

13:25

think about that purpose? Having written that

13:28

this book, I think it's

13:30

a very noble purpose. Agree,

13:32

The whole point of the book is that

13:35

they don't live up to that purpose in many

13:37

important ways, and some of the work

13:39

that they do does real harm

13:42

to the world. But you know, they also have

13:44

values, and that's the crux

13:46

of the problem is that their number one value,

13:49

you know, over the decades, has been

13:51

to serve the client first. So,

13:55

um, let's get into some of the

13:57

things that really opened

13:59

my eyes in this book. One of the many

14:02

unexpected things that I got from

14:04

it is mackenzie's

14:06

role in a number of aspects

14:09

of let's call it lead stage capitalism. So,

14:12

for instance, income inequality.

14:15

I never thought about McKenzie

14:17

when it came to that topic. Can

14:19

you talk about how the firm had

14:22

a role in the you know now

14:24

vast and growing divide between workers

14:26

and managers. There are

14:29

so many ways that mckensey's had a big role

14:31

in this. But it started in nineteen fifty

14:33

and McKinsey had been hired by General Motors

14:36

to do a study about a compensation

14:38

for its executives and and mckensey

14:41

looked at compensation at many companies

14:43

and it was this hot shot partner, young

14:45

guy named Arch Patton back in nineteen

14:48

and he made an amazing

14:50

discovery. He discovered

14:53

that workers pay was catching

14:56

up to executive pay, or was growing faster

14:58

than executive pay. So the game between

15:00

executives and workers was narrowing.

15:03

Well wasn't big enough. And you

15:05

know, and this was a time when labor unions

15:08

were strong. There had been you know, something called

15:10

the Treaty of Detroit, where you know, workers

15:12

got all sorts of benefits, you know, so that they

15:14

wouldn't strike. So this

15:17

got spread around from company to company,

15:19

and some companies executives

15:22

didn't like the fact that they were ranked lower

15:24

than other ones, and it started this race

15:26

to the top where the companies would

15:28

raise pay for their executives based on these

15:31

McKenzie studies. That happened year

15:33

after year after year, and this guy arch Patton

15:35

would publish these unfortunate he published these

15:37

in the Harvard Business Review. So company

15:40

executives started knowing what people in other industries

15:42

were making. They didn't want to be behind.

15:45

Stock options started becoming in vogue.

15:48

Mckensey did these compensation studies,

15:51

you know, for for individual companies and became a

15:53

very big part of the firm's work.

15:55

And this guy alone was billion about

15:57

ten of all revenue

15:59

at mckinn z at the time. Yeah,

16:02

so he built a huge practice and you

16:04

could you kind of go, let's see, let's who

16:06

are you going to call if you want to get a get

16:08

a raise and you're a CEO, call

16:11

call our chip McKenzie, right right.

16:15

Yeah. Simultaneously though, McKenzie

16:18

is as the efficiency expert showing

16:21

some of those same companies how to cut

16:23

costs by downsizing and

16:25

then ultimately offshoring talent

16:28

to other countries to drive compensation

16:31

of workers lower. That's right.

16:33

So offshoring was all the

16:35

vogue at McKinsey in the nineties.

16:37

There were mckensey partners writing books

16:40

about the benefits of off shoring globalization.

16:43

You know, McKenzie would just talk

16:45

about this with endless companies and

16:47

they would put slides in slide

16:49

decks about the benefits of globalization,

16:52

that benefits of moving your work to

16:54

China from the United States. And

16:56

so because of their reach

16:58

and all these corporate ward rooms, they were

17:01

able to spread this gospel about the

17:03

benefits of off shorey. So

17:05

just to unpack this, McKenzie profits

17:07

by helping shareholders profit by firing

17:10

American workers on mass in some

17:12

cases, or firing them and moving their

17:14

jobs overseas. And

17:16

then they also profit by helping

17:18

management profit by starting

17:20

an executive pay practice that drives

17:22

CEO pay into the stratosphere. That's

17:26

quite clever, and it leads to a

17:28

second eye opening aspect

17:30

of the book. I learned that in multiple

17:33

industries and engagements, mackenzie

17:35

often profits from working for both

17:37

sides of an issue. I was really

17:40

struck by their relationship

17:42

with not only Big Tobacco,

17:44

who they worked with for years,

17:47

but also their relationship with the

17:49

FDA Center for Tobacco Products,

17:52

which is responsible for regulating

17:54

Big tobacco, and they worked with those entities,

17:57

as I understand it, simultaneously, they

18:00

also consulted with Jewel, which

18:03

at the time claimed to be a smoking cessation

18:05

product, as Jewel

18:07

wound up marketing their product to teens

18:10

and thereby addicting an entirely new generation

18:12

to nicotine. And this

18:15

strategy of working multiple

18:17

size of the problem has has netted

18:19

the company massive fees over

18:22

the years, has it not? It really

18:24

has. Almost since the beginning of McKenzie,

18:27

they've been happy, and they've they've made it

18:29

clear that they work for multiple companies

18:31

in the same industry, so for example, they could work

18:33

for four GM and Chrysler at

18:35

the same time. But but what

18:38

you said is on a different level entirely

18:41

when McKenzie is working for both the regulator,

18:43

with the FDA being the poster child, and

18:46

then the companies that are actually regulated.

18:49

And as you pointed out, the

18:52

the idea that McKinsey was working

18:54

um for big tobacco and they only stopped working

18:56

for big Tobacco in one

19:00

Yeah, and I guess somehow

19:02

this is all legal question

19:04

mark, So that

19:07

is a question. It appears to be legal.

19:09

You know, McKenzie had to pay more than

19:11

six hundred million dollars are settled with

19:14

these states attorneys general investigations

19:16

last year into their work with opioid makers. They

19:19

write Perdue and oh Melon

19:22

crossed several of the opioid makers Jay

19:25

and Jay that that they admitted no wrongdoing.

19:27

And that's a constant theme. And

19:30

you know, the certainly the Congress has been

19:32

really looking into this conflict as well. There were some very

19:35

testy hearing back in April when

19:38

members of Congress were asking the

19:40

head of mackenzie, this guy named Bob stirred Fell's

19:42

point, like, you know, how can you work for the f d A

19:45

and uh, the regulated companies

19:47

like Perdue at the same time. Now, of course he

19:49

would say, well, the work we did for the f d A

19:52

wasn't specific to any of these companies, so

19:54

there was no conflict, right,

19:57

yeah, so legal

20:01

or potentially legal? Would

20:03

you consider that to be ethical? No?

20:06

No, straight up no, yeah,

20:08

you know, and neither right. And one

20:10

thing we discovered is we talked to some people at the

20:12

FDA or former people, senior people. Hey,

20:14

did you know that McKenzie was also

20:17

advising these drug makers, these tobacco makers

20:19

at the same time they were advising you, And they didn't know

20:22

it was. They were surprised, which is

20:24

terrible. It's right, you know. And

20:26

I've always thought mackenzie's secrecy is

20:28

a little bit of just a kind of marketing ploy

20:30

to create mystique, but it does seem

20:33

like it's it's actually a really important

20:35

part of their business model, because if you have

20:38

total secrecy on everything that you're

20:40

working for, both internally and externally,

20:43

you can get away with stuff like that.

20:46

That's right. We only know what we've uncovered,

20:48

but you know, there's lots more

20:50

secrets out there, I'm sure. Uh,

20:52

And You can do a lot of things

20:55

if no one knows what you're doing. Right.

20:57

There was another story that you told in

20:59

the book that I don't know whether this is working

21:02

two sides of an issue, but I did find it cynical.

21:04

You tell the story of Dixon Pinner,

21:08

who is or was Mackensey's

21:10

head of sustainability at the Aspen

21:13

Ideas Festival, talking about

21:15

the pressing need for corporations to

21:17

take quick and dramatic action on climate

21:19

change. That's great

21:22

at the Aspen Ideas Festival. But

21:24

this is a company that worked

21:26

for years and continues

21:28

to work with some of the biggest

21:31

fossil fuel companies in the world.

21:33

Right, So we called McKenzie out on this in a story

21:36

in The New York Times a year

21:38

ago, and it's a you know, it's a big chapter in

21:40

our book. Again. If mackenzie

21:42

was working with big oil, you know, the gas

21:44

companies, the coal miners, to reduce

21:46

their carbon emissions, that would be laudable.

21:49

And Dick and Penner, he's like, he's head

21:51

of the sustainability for them. He he knows

21:53

about climate change. He he can really

21:55

do a great presentation showing how urgent

21:57

the problem is. And he's done lots of great report

22:00

The problem is, I tell you,

22:02

we did this story a year ago, and

22:05

McKenzie is unapologetic about

22:07

its work with these companies. What we tried

22:09

to do, and it's in the book, is to show that a

22:11

lot of their work with these companies has nothing

22:13

to do with cutting their carbon emissions.

22:16

It has everything to do with making them a more

22:18

profitable and more productive coal mining

22:20

company or oil company or gas

22:22

company. In on their website, there

22:25

all these studies of McKenzie is doing all

22:27

this, these words about, you know, committed to

22:30

protecting the planet, committed to

22:32

reducing emissions, and yet at the same time,

22:34

these big clients that they're working for

22:37

are are, you know, some of the world's biggest

22:39

polluters. Yeah, some of the data

22:41

that you have in the book is incredible. Let me

22:43

just read a bit. Is a note I wrote

22:45

here for myself for a firm committed

22:48

to protecting the planet. McKenzie counts

22:51

seventeen mining and fossil

22:53

fuel companies among its biggest clients.

22:56

Collectively, those clients have earned McKenzie

22:58

hundreds of millions of dollars in recent years.

23:01

Since two thousand and ten, McKenzie has worked

23:03

with forty three of the hundred

23:05

companies that have pumped the most carbon

23:07

dioxide into the atmosphere since nineteen

23:10

sixty five. These

23:12

forty three companies were responsible for thirty

23:14

eight percent of the entire planets

23:16

carbon dioxide output in and

23:20

Chevron number three on the list, paid

23:22

McKenzie fifty million dollars in

23:24

fees in So

23:27

they're hardly not in the carbon

23:29

business and for them to make

23:32

any claims about being pro sustainability

23:35

seems ridiculous to me and a little

23:37

dangerous. It does. And I tell

23:39

you, you know, they were apologetic

23:41

about their work with opioid makers, they

23:43

were apologetic about their work in South

23:45

Africa, but they are not apologetic

23:48

about their work with these carbon emeters.

23:51

And that's not to say that mckenzy doesn't do good

23:53

work, you know, on sustainability. They do some

23:55

and uh and they do work with some great

23:58

green companies and and that's

24:00

a fact, but they also do

24:02

you know what we outline that these work with these

24:04

big polluters. You know, one of the

24:06

things that you point out in the book is that McKenzie

24:09

is really good at spreading ideas and they've

24:11

done it many times over their history,

24:13

and we're now feeling what I

24:15

hope is a new day dawning in capitalism,

24:18

and mackenzie could be tremendously

24:20

powerful if they decided to really

24:23

get behind, for instance, conscious capitalism.

24:25

I couldn't agree more. One of the things

24:28

McKenzie does really well is higher

24:31

really smart people who will work their

24:33

butts off. And if those

24:35

people can be harnessed to consistently

24:38

do things that are good and

24:40

will make the world more sustainable and more equitable,

24:44

you know, all within the free market framework,

24:46

which is not a contradiction, then

24:49

hats off to them if they

24:51

can do that. Let's touch on

24:53

another topic that is

24:56

contained in the book which I did not realize,

24:58

which is McKenzie's were with authoritarian

25:01

governments. You tell two

25:03

stories about this, McKenzie's work

25:06

with the Chinese government and their work

25:08

with the Saudi Arabian government, and

25:11

it just struck me that mackenzie

25:13

is is very good at finding growth

25:15

industries and attaching themselves

25:18

to them, and authoritarianism seems

25:20

to be spreading around the

25:22

globe. Is this the new growth

25:24

industry for mackenzie? So

25:27

um, After we wrote about their work in

25:29

China, after we wrote about their work in

25:31

Saudi Arabia. McKenzie did

25:33

say that they've changed the way they

25:36

select clients and now

25:38

they say they will not work for the

25:40

defense ministries, justice ministries,

25:43

lease interior ministries of

25:45

authoritarian countries. Um.

25:48

But a lot of the harm and a lot of the power

25:50

in authoritarian countries is not in those ministries.

25:53

It's in the ministry of economy. For example.

25:55

If you're working to make an authoritarian

25:58

country like Saudi Arabia more

26:00

robust that the theocratic autocratic

26:03

House of Saoud, you know, more sustainable,

26:06

you do, You're doing that through the Ministry of Economy.

26:09

And that's what we've found that that work is

26:11

still continuing McKenzie still

26:13

in Saudi Arabia and in China.

26:16

We also discovered that McKenzie for

26:18

a time was a real champion of some

26:20

of these marquee Chinese policies

26:23

that were meant to burnish Chinese

26:25

power throughout the world. They

26:27

have come out publicly and said they've changed

26:29

their ways with regard to, for instance,

26:32

the Chinese government. Are they explicitly not

26:34

working with Chinese

26:37

government owned or run companies.

26:40

No, no, no, they have not said that at all, So

26:42

they they are still working

26:45

with some of the biggest Chinese state owned

26:47

companies. What we looked at in our

26:49

book is the nineties six

26:51

Chinese companies, which are the centrally

26:53

managed state owned companies that they're

26:56

called the John Young Ta. These are

26:58

the companies that are the basis

27:00

for Chinese state power. And so

27:03

there are many of these companies that

27:05

mckensey works for. In fact, we never

27:07

found them really working for the you

27:10

know, the interior ministries the defense

27:12

ministries in these countries, but they

27:14

don't have to work with those ministries

27:16

necessarily to be engaged in work

27:19

that's in direct opposition to, for

27:21

instance, the interests of the United

27:24

States, that's right. So you know,

27:26

one of the areas we we looked at was their

27:28

work for a company called China Communications

27:31

Construction Company, which builds

27:33

those artificial islands in the South China Sea

27:35

that some people fear will turn that area

27:37

into just a big Chinese lake. We know

27:39

that the Pentagon is really

27:42

concerned about this, and McKinsey obviously

27:44

works for the Pentagon as well, And so there's another contradiction

27:46

there. Yeah, it's it's

27:48

odd and I guess you

27:51

know this has to do with the perspective that you take

27:53

my guests would be and and you

27:55

keep me honest here. The way they defend that is

27:57

to say, we're a global company, We're not a US

27:59

come I. We don't have anybody's particular

28:02

interests in mind. We want to help the

28:04

people who pay us to advance

28:07

their their agenda, whatever

28:09

that agenda is. That

28:12

maybe so, but I'm

28:14

sorry. You know, if you're working for one client

28:17

and the interests are opposed to another

28:19

client, especially if that clients, you know,

28:22

the US government, and if

28:25

the work in Mackenzie's doing is in contradiction

28:27

to national security, I

28:29

think that's something that they called

28:31

out. Okay, so other

28:33

shocking stories, and we'll just touch on these. Mackenzie's

28:36

role in securitized debt.

28:39

You know, this idea of turning

28:42

debt into essentially a stock

28:44

that other people can buy or a

28:46

security that other people can buy to get debt

28:48

off your books, which in many

28:51

ways lead directly to the housing

28:53

collapse and bankrupting at

28:55

least tens, if not hundreds of thousands of Americans.

28:59

They did of work at Purdue literally

29:02

using the word turbo charging sales

29:04

of OxyContin in the middle

29:06

of the opioid pandemic.

29:08

It was obviously already clear

29:11

that this was a problem when McKenzie stepped

29:13

in and tried to help produce pharmacs sell more of

29:15

this stuff. Which leads to

29:17

the question that I have about this company, which

29:19

is, is there a client you think they would

29:22

not take on? Um?

29:24

I am sure there are clients they would not take

29:26

on. And you know, we don't hear about

29:29

the clients they reject. McKenzie says, they

29:31

actually turned down a lot

29:33

of work. I don't know what that work

29:35

is specifically. Yeah, okay,

29:39

So just to to round

29:41

this up a little bit, I found myself

29:43

as I read the book and listen to all these stories,

29:45

having a lot of thoughts about this. Mackenzie,

29:49

in one way or another, has been at the scene

29:51

of some of the most egregious examples of capitalism

29:54

run a muck, and throughout the book you pointed

29:56

out that in many cases the

29:58

strongest criticism can from within,

30:01

most often from young consultants

30:03

who joined to make a positive

30:06

and lasting change on the world, Like the Sign

30:08

says, and we're shocked

30:10

by what they discovered when they got in there.

30:13

And you know, this is part of a broader

30:16

movement among young people who

30:18

are demanding change. And

30:21

I guess my question is, how do you think mackenzie

30:24

stays relevant in that

30:26

changing landscape and

30:28

continues to win with talent.

30:31

If you look at the mckensey website, you

30:33

could be forgiven for thinking that they

30:35

are the poster child for responsible

30:37

capitalism, for ethical capitalism.

30:40

It's all about doing good, it's all

30:42

about saving the planet. So on

30:44

the surface, they seem like a

30:46

very ethical company, but again,

30:49

the work that makes them a lot of money

30:52

oftentimes is in contradiction

30:55

to their stated values as

30:57

a company. Well, in addition

30:59

to claiming to be purpose led themselves,

31:01

they also claim to be helping clients

31:04

make the transition to being purpose

31:06

led today. It's a big way to make money, it's

31:09

it is. Yeah, I just question

31:12

their credentials. We certainly

31:14

do. But you know they can make a lot of money helping

31:16

companies with their environmental these

31:18

e s G goals or you know that

31:21

that's that's a big way to make money. And so

31:23

advises on this. Yeah,

31:26

one other quick um area

31:29

that I wanted to delve into. His values.

31:31

They have numerous values and they all

31:33

sound as values tend to really

31:35

really great, But there are three that

31:38

I wanted to probe on. The first is

31:40

preserving client confidences. You

31:43

know, their renowned for secrecy. They

31:45

claim that it's for their clients.

31:48

But the other revealing thing about

31:50

your book is that this policy of total secrecy

31:52

has been incredibly profitable for

31:54

them, and I guess my question is do

31:56

you think that can endure? You know,

31:59

secrets are just harder to keep these

32:01

days, so do you think that policy

32:03

is going to change. I don't

32:05

think it's going to change. I think it's baked into

32:07

mckenzy. And some of that is legitimate

32:10

tie because, for example, if

32:12

they have trade secrets that they learned from a company,

32:14

they can't reveal that, so they have to be trusted

32:17

to keep those secrets. But it

32:19

is becoming easier in some ways,

32:21

you know, through lawsuits, through whistleblowers,

32:25

through very idealistic young people

32:27

who just they're not going to take

32:29

it anymore and they

32:31

want to work for an ethical company.

32:33

So I do believe in

32:36

you know that it does depend though on continued

32:38

attention by journalists. If there's

32:40

not attention paid to these companies, then

32:42

I think that secrecy and especially

32:45

the malign aspects of that secrecy

32:47

will continue. Another

32:50

value observe high ethical

32:52

standards. How are they doing here?

32:54

Yeah, well I think, uh, you know, there's some there's

32:57

some issues there. I guess the real

32:59

question is one happens when this value contradicts

33:01

either the secrecy value or the firm's

33:03

profitability. You know, lots of companies have

33:06

values and mission statements, and usually they

33:08

they're really meaningless, right. I do think

33:10

mckensey is different. Um, they really

33:12

take this stuff seriously. They

33:15

you know that people are always talking about

33:17

values at McKinsey. They have a Values

33:19

Day, you know, they stand down

33:21

and talk about values every year, and you

33:24

see it an email after email after email.

33:26

The another value I'll

33:28

have to say is that the right to dissent, the obligation

33:31

to dissent if you see something wrong, you

33:33

say something, and that that is a value

33:36

that's invoked a lot, and that's helped

33:38

us write our book because of these incredible

33:40

emails that these young mckensey associates

33:43

are writing, for example about their work with ICE,

33:45

uh, you know, immigration and customs enforcement.

33:47

And so there's that value.

33:49

But you know, kind of like with

33:52

Lord of the Rings, where there's one ring, you know,

33:54

that rules them all, one ring that binds

33:56

them the the one value that is above

33:59

all the other values is

34:01

the client interests come first.

34:05

Client interests come first. And but that's a If

34:07

your client is a bad actor and

34:10

you're working unstoppably to

34:12

help, what is your responsibility

34:14

then in the world, right do you have

34:17

none? I mean so so yes?

34:19

Um. The obligation

34:22

to keep your client confidences

34:24

and to put the clients interests

34:27

above the firms can lead

34:29

you to basically doing

34:31

things that, from a societal point of view,

34:34

are just unethical. Yeah.

34:38

Um, okay, here's a here's

34:40

a really self serving question for

34:42

you, Mike. You know, you're obviously a professional

34:44

journalist, and we're obviously amateurs at calling

34:46

bullshit. We just follow

34:49

our nose, and so far, our nose has

34:51

led us to do individual episodes

34:54

on Jewel, BP, Course,

34:56

Civic, all of whom are mentioned in the book,

34:58

and the FDA also in the book. And

35:01

I was just blown away to discover that

35:03

the common denominator between all of

35:05

those entities is mckensey. What

35:09

do you make of that? They're

35:11

everywhere, They're they're absolutely

35:13

everywhere. They work for all these companies,

35:15

and they work for all these government agencies.

35:18

So if you scratch the surface at a lot of companies,

35:21

you know, you'll discover mackensey.

35:23

Was there another thing that I found

35:25

myself thinking over and over again,

35:27

how little I understood about the ways

35:30

in which the world that we all live in today

35:32

has been shaped by this one firm.

35:35

And it's easy

35:37

to really make

35:40

up a fairly scary story about

35:42

their impact by connecting a few dots.

35:44

If I told you the story, it

35:46

would go kind of like, well,

35:48

the relentless focus on helping corporations

35:51

externalized cost like pollution,

35:54

and also by downsizing and

35:56

all shoring talent and advocating

35:58

for executive pay

36:01

has led to the climate crisis and

36:04

also income inequality,

36:06

as well as the destruction of the middle class,

36:09

which leads to depression

36:11

and anxiety in in the devastated

36:13

middle class, and political polarization,

36:16

which leads to the opioid crisis

36:19

and the rise of authoritarianism.

36:21

So we can't blame

36:24

McKenzie for this whole mess,

36:26

of course, But maybe

36:29

we got started on this because of

36:32

the feeling that that McKenzie,

36:34

you know, had a role in this. What so

36:37

many McKenzie consultants and former

36:39

consultants say, is that McKenzie is an

36:41

accelerant. Several people who

36:43

used that word, they're an accelerant.

36:46

They didn't invent assets

36:48

securitization, but they spread the

36:50

gospel. They didn't invent offshoring,

36:53

but they spread the gospel. They didn't

36:55

invent shareholder capitalism,

36:57

but they spread the gospel. Yeah,

37:00

I think that's that's a great point,

37:02

and it's a great way to think about them,

37:04

you know, for for better or worse.

37:07

Okay, So just

37:10

a reminder, mackenzie's purpose

37:12

is to help create positive, enduring

37:15

change in the world. And so Mike,

37:17

if you you know, we're able

37:20

to give them advice on how

37:23

they could change to better live that purpose,

37:25

what would you tell them? You know, I'm not a

37:27

philosopher and I don't play one on TV. But

37:30

when you see unethical behavior, you

37:32

know it. It doesn't take a genius

37:34

to know that you shouldn't be working

37:36

for a hospital to extract money out

37:38

of poor people. You shouldn't be

37:40

pushing opioids. You shouldn't

37:43

be working for big tobacco. You shouldn't

37:45

be working for the Saudi government to make them more

37:47

sustainable, or with Chinese government

37:49

ministries. It doesn't take a

37:51

genius. There are gray areas, of course,

37:54

but they need to have a lot more of

37:57

and I don't use this word a lot, but a

37:59

lot more EQ a lot more emotional

38:02

quote that they don't have that now. They're

38:04

so focused on their spreadsheets and their slide

38:06

decks than in so many cases they

38:09

lose sight of the big picture and

38:11

that's the purpose of their work and the

38:13

ethics of their work. So they need to

38:15

be much more conscious about that. Mike,

38:17

last question on this show. We have a

38:20

tool, or to use a McKinsey ism,

38:22

a technology called the B S

38:24

scale to measure the gap between

38:27

word. Indeed, it goes from zero

38:29

to one hundred, zero being

38:31

the best zero b s and

38:33

one hundred being the worst total bs.

38:37

So on that scale, how would you

38:39

rate mckensey. So this goes

38:41

against all the instincts as a

38:43

journalist to give you this number, but

38:45

but I'm gonna do it. I would have

38:47

to give them a ninety. So they're they're way

38:49

up there on the BS. And you

38:51

know, I think our whole book has been calling out

38:54

the b s at mckensey.

38:56

They do lots of great work, they

38:58

have lots of great people. So many

39:00

people at McKenzie I am their friends.

39:02

I would you know. They're great people, but

39:06

on such important, big issues

39:09

around the world, they really fall short and

39:11

it clashes so much with what they

39:13

say in public on their website. Mike,

39:17

thank you so much for being here today. This was

39:19

an awesome conversation and thank

39:21

you for the work that you're doing. Please keep it up. Thank

39:24

you very much. Time. It was a real pleasure, folks.

39:28

It is time to make the call. Is

39:31

mackenzie really creating positive

39:34

and lasting change in the world? Based

39:36

on what I've heard so far, I gotta

39:39

call bullshit. If

39:41

your purpose is to create positive, lasting

39:44

change, then you have to help the world

39:46

think long term rather than continuing

39:48

the fixation with the latest quarterly results.

39:51

If you're going to create positive, lasting

39:54

change in the world, you have to decide

39:56

that there are good client dollars and there

39:58

are bad client dollars, and

40:00

you have to learn to say no to the bad

40:02

client dollars. And

40:05

if you want to create positive, lasting

40:07

change, you have to have the courage

40:10

to take a stand on issues that matter to

40:12

the next generation of McKinsey consultants

40:14

and McKenzie clients. McKenzie

40:19

has had multiple chances over the years,

40:21

especially lately, to make some of these

40:23

changes. So far they

40:25

have completely failed. But

40:29

as you know, we believe that bullshit

40:31

is a treatable condition. So right

40:34

after the break, we're going to talk with two x McKinsey

40:36

consultants about actions the firm could

40:38

take to turn things around. Stick

40:41

with us, all

40:53

right, folks. I am very excited

40:55

to introduce today's experts, both

40:57

ex mckensey consultants, Rizwan

40:59

Nave and Eric Edgstrom.

41:01

We're going to help us help McKenzie

41:03

to better live their stated purpose. Welcome

41:06

to calling bullshit. Pleasure

41:08

to be here. It's great to be here. So

41:10

Rizonant, please tell us a little bit about

41:12

your background, about your work at McKenzie

41:15

and and also what made you decide

41:17

to to leave the firm. I'm

41:19

a professional with about a decade of experience

41:22

in the broader natural resources space.

41:24

About half of that or five years at McKinsey,

41:27

where I was a consultant and then an engagement

41:29

manager in our Electric, Power and Natural

41:31

Gas practice, which is a subgroup of our

41:34

broader global energy and Materials group.

41:36

My job at McKenzie as

41:39

an engagement manager was to lead teams

41:41

and work with the senior sea level

41:43

leadership and board level clients and the power

41:46

and sustainability space. I've worked

41:48

on both highly emitting and decarbonizing

41:51

clients, but the latter part of my

41:53

career I would say was almost exclusively focused

41:55

on energy transition topics. At this

41:57

point, maybe it's worth talking a little bit about

42:00

the context around in my departure. For

42:03

myself, I try to work within paras

42:05

line trajectory to articulate a different

42:07

way to help these clients decarbonized

42:10

into articulate that the firm

42:12

should measure, disclose set and aspiration

42:14

for reducing its client emissions

42:17

and take steps gradually over time

42:19

to calibrate such that it's edging

42:21

this portfolio towards a Paris and line

42:23

trajectory. I couldn't fully explain

42:26

why we were running into

42:29

leadership not giving us time or not

42:31

fully engaging or various explanations

42:33

as to why this is complex and needs

42:36

a second look. And after sort

42:38

of months of being stuck in this, myself

42:41

and a few other colleagues were quite motivated

42:43

articulated in a letter to senior

42:45

leadership that we need to do more on our client

42:48

emissions that we carry immense risk as our

42:50

clients irrevocably alter the

42:52

Earth's environment with their emissions,

42:55

and we, you know, open this to an

42:57

audience inside the firm globally, We've got

43:00

eleven signatures within

43:02

a week, I believe, and then suddenly the same

43:04

folks who couldn't give us as

43:06

much time were very attentive. Yeah, that's

43:08

a huge number of people. Just contextually

43:11

how many people work at Mackenzie I would

43:13

say around thirty. That

43:16

letter, in functional

43:19

terms also went nowhere. After

43:22

months of this, you know, having seen

43:24

the frankly very uninspirational

43:26

response, I resigned

43:29

and articulated in an email to senior

43:32

leadership, copying the majority

43:34

of our sustainability practice globally, where

43:37

by I essentially laid out the

43:40

case that we do have some

43:42

responsibility. If we take credit for

43:44

our impact, we are also associated

43:46

with the negative externalities of that impact,

43:49

and we cannot profess to the world and

43:51

shout to the rooftops that we are the greatest

43:53

private sector catalyst for

43:56

decarbonization globally while continuing

43:58

to serve easily

44:00

the worst polluters on the planet that are

44:02

not on even on a trajectory and essentially

44:05

resisting or I'll try refusing

44:08

to institute even the most basic modicum

44:11

off measurement, disclosure, targets,

44:13

setting and policies. Right, I

44:16

think that context will be very helpful for people,

44:18

and it's it's hard to argue with your logic.

44:21

So, Eric, just as Raiswana has

44:23

done, can you tell us a little bit about yourself

44:26

and also the situation that you found yourself

44:28

in that caused you decide to move on from

44:30

the firm. So I grew up in Massachusetts

44:33

and my first career was in the military.

44:36

I attended West Point and

44:38

deployed to Direct Combat where I led

44:40

troops in Kanadahar Province, Afghanistan,

44:43

and after that was part of the Honor

44:46

Guard, where I was the Presidential Escort

44:48

platoon leader during the Obama

44:50

administration. From

44:54

I realized that the military was

44:56

not sort of the public service good, especially

44:58

that particular mission, the War

45:01

on Terror, since military service is not

45:03

an absolute good, that I wanted

45:06

to find a different way to apply

45:08

myself to the you know, my

45:11

my vocation in the world. And

45:13

so I attended Oxford and did a

45:15

dual degree, doing an MBA in a Master science

45:17

studying climate change, and

45:20

I moved to Australia, so I joined

45:22

McKenzie in and

45:25

while I was there, I found that the

45:28

projects that were available were not anything

45:31

like what we're advertised, and

45:34

rather than what you might see on a

45:36

mckensey website which talks about vaccine,

45:39

cold storage or renewable

45:42

energy, that in practice is

45:44

far and few in between.

45:46

The difference, of course, between sort of puffery

45:49

of any business where they try to make themselves

45:51

look like number one and we have

45:53

the best flavor was very different

45:56

with mckensey. You're you're actively

45:58

saying that we're taking a very positive role

46:01

and that they're hanging their hat on the notion

46:03

that this is going to be something that we're going

46:05

to work on. And to set

46:07

the stage, you know, we went on a firm off

46:09

site to Port Douglas in the Great Barrier

46:11

Reef and the

46:14

consultants would go out for a day trip and go

46:16

snorkeling to look at the coral reefs which were

46:18

actively dying, and

46:21

then they would return back to work

46:23

where they would help increase extraction

46:25

at a thermal coal site. And I remember

46:28

hearing people say stuff like well, at least

46:30

you know, we got a chance to see it before it died

46:32

out, and it was basically

46:35

through our own work or

46:38

the firm zone work rather that it

46:40

was making the likelihood of

46:42

a sustainable future ever harder

46:45

to achieve. So that's sort

46:47

of some of the stuff that I was passionate

46:50

about, and you

46:52

know, it was more than just the work

46:54

and acknowledging that Mackenzie is an a moral

46:57

institution. They're only doing what

46:59

earns the dollars. That's not necessarily

47:02

a bad thing if they advertise themselves

47:04

as such. Yeah, exactly. That's

47:06

that's a key belief that we have

47:08

on the show is it just needs

47:11

to do what it says on the label, right,

47:13

and and if you're transparent about

47:16

just wanting to make money, we're fine with

47:18

it. But it's when you say that your purpose

47:20

is to help create positive, enduring change

47:23

in the world, and then your

47:25

activities belie another

47:27

agenda. Absolutely. So the

47:30

apex of the experience

47:33

of sort of descent within Mackenzie to try

47:35

to realign the values

47:37

of the firm. We're at Values

47:40

Day in twenty nineteen, and so

47:42

every year Mackenzie gets together

47:45

to take you know, a hot wash, look

47:47

at their values and say did we live them?

47:49

This last year, where did we fall

47:51

down, where did we come short? And what might

47:54

we do to improve our values as

47:56

a company, which is a great thing.

47:58

I was in the audience and

48:02

the senior partner responsible for

48:04

the Asia PAC practice for

48:07

Australia New Zealand came up to

48:09

the microphone and said, like, our values

48:11

need to continue to evolve as the

48:13

sort of atmosphere and what

48:15

society expects of us continues to evolve.

48:18

And he said something to the effect of we

48:20

should no longer be serving clients

48:23

that kill people or cheat their customers.

48:27

And I raised my hand and amongst

48:29

an audience of five people, was

48:32

like, how do you reconcile

48:34

this with what we're doing with, for instance,

48:36

the military, that these actions

48:39

would be considered state terrorism.

48:41

We're not legally at war with these countries

48:43

that were actively bombing, and you know, I continue

48:45

to serve these clients, and so I also

48:48

you know that that didn't get me a lot of UM

48:51

positive attention, UM. And

48:54

in my leaving email, I articulated

48:57

these same arguments, not really

49:00

seeing any client names, as I have not mentioned

49:02

any client names in this discussion, and

49:04

I was banned from the McKenzie

49:07

Alumni network so this

49:09

is a an act that I think

49:11

has only happened to other

49:13

people that were insider trading, for instance.

49:16

So I had the same level of response

49:18

for challenging McKenzie's client

49:20

service record as would an insider

49:23

trader, and that seems counter

49:25

to McKenzie's culture. I mean, my culture.

49:28

Can I hop in there real quick? Of course, it's

49:30

not discounter to the culture. The firm has

49:32

a stated policy two

49:35

policies. One is the obligation

49:37

to dissent, this notion that if

49:39

you are a dissenter, you're not only should

49:42

feel supported to speak up, but you have an obligation

49:44

to speak up, which I presume

49:47

Eric felt. And then the second policy is, you

49:49

know, this policy of non retaliation, which

49:51

also was not applied. And I think it's

49:53

important to read the

49:56

intentions in terms of the actions

49:58

and entity takes and not in terms of

50:00

what it says. In this case and

50:03

in this case, uh, one can derive

50:05

from the actions that you know

50:07

the firm is

50:09

not open to certain types of descent and

50:12

does not see certain types of retaliation

50:15

as inappropriate. That

50:18

that tells you a lot about the

50:21

actual culture of the company. I appreciate

50:23

both of those stories. A great deal, and

50:26

our our take on on that kind of

50:28

thing we call it bullshit, a gap between

50:31

word indeed, and we

50:33

also believe that that bullshit is

50:35

a treatable condition, but it has to be addressed

50:38

through action. And so that's what we heard it really

50:40

today to talk about UM is

50:42

to get into some ideas to bring mckensey's

50:45

actions more closely in line

50:48

with its stated purpose. So

50:50

I wonder if I could ask you, riz

50:52

want to lead us off in in a

50:54

couple of minutes or less, you know,

50:57

what would you tell mckensey

50:59

Global man partner Bob stern Fells

51:02

or or other McKenzie leaders to change

51:04

at McKenzie to better live their

51:06

purpose, which is just to remind folks

51:08

to help create positive, enduring change

51:11

in the world. In

51:13

my opinion, asking Bob,

51:16

hey, you know you should do these

51:18

things, we already did that. So in

51:20

my opinion, the question to ask really

51:23

is what will society do? What will

51:25

states and regulators do? Is just

51:27

trust us going to cut it? Should privately

51:29

own professional services firms be exempt from emissions

51:32

measurement and disclosure just because of their choice

51:34

of financing? The question

51:36

is what will climate focused organizations

51:38

do from the UN Climate Compact and

51:40

nonprofits? Are they willing to continue

51:43

to engage the services of firms

51:45

knowing full well that they have these contradictions

51:48

and conflicts of interest in their portfolio? What

51:50

will governments do? What will

51:53

new hires do? So to Bob, I would say

51:55

what market signals as you're waiting for what's

51:58

more, surveys that show that

52:00

this is the number one concern across

52:03

alumni, current students, current employees

52:06

with regards to client emissions? Is

52:08

he waiting for a lawsuit? Will

52:10

that be too late? Like I would ask those questions

52:13

because in my opinion, society needs

52:15

to subject the firm to material consequences

52:17

and disclosure and then the firm will be

52:19

incentivized to act. So, to

52:21

paraphrase, you were reply to this

52:23

question, McKenzie isn't

52:27

or can't fix itself and

52:29

so others must fix it?

52:31

Is that fair? I mean we

52:34

can simply derive that from the actions they

52:36

have taken thus far. Right.

52:38

Okay, Um, that's bleak,

52:41

But I understand why you

52:43

would take that position given the story that you've

52:45

just told us. So fair enough, Eric,

52:48

any thoughts about that? I mean, I

52:50

think riz one is spot on that

52:53

the firm is going to respond to

52:55

the environment in which it exists. If

52:59

it's no longer a profitable with

53:01

the calculus that they do to continue

53:03

serving these clients, they will stop

53:05

doing it. And what are the costs?

53:08

Well, the firm doesn't manufacture

53:10

anything. Mackenzie doesn't

53:12

produce any hardware. They rely on

53:15

people to do the work. If people

53:17

stop showing up to apply to mckenzy

53:20

and say, like, I want to work at a

53:22

top tier consulting firm that isn't turbo

53:24

charging the climate crisis, Bob

53:26

will get the message right now. The

53:29

the book that was released by the

53:32

two New York Times reporters is effectively

53:34

a reputational hand grenade, and

53:37

they pulled the pin and they handed it back to Bob.

53:39

He has decided to sit on it um.

53:42

The question,

53:45

now that the world knows some

53:47

of the negative externalities

53:49

that they multiply, is

53:52

what are they going to do about it. One

53:55

of the quotes in the book from a former

53:57

senior partner talked about it

53:59

effectively being long

54:02

term stupid to continue these practices.

54:04

I mean, this is the thing. Mckensey is a business

54:06

consultancy and it says it's looking to

54:08

make enduring change in the world.

54:11

So it has this long term view, but

54:14

it's it's it's giving clients

54:16

bad advice. And when you're talking about being

54:19

a great place to retain exceptional

54:21

talent um if

54:23

you ask any gen z R. Do you want to

54:25

work at a company that knowingly is making

54:27

the most important issue facing the planet

54:30

worse? What are they going to do? So

54:32

I I, you know, hope that this gets out

54:35

to all those undergrads at Princeton

54:37

and m I T and cal Tech and

54:39

University of Michigan and Georgia Tech. And

54:42

when they're thinking about what they want to do,

54:44

are they in the interview room going

54:46

to ask that associate partner what

54:49

are you guys doing about this? And are you

54:51

continuing to serve these clients? They will get the

54:53

message and they will change. Yeah, I

54:55

agree, thank you for that. And Eric,

54:58

just directly, would you do to

55:00

fix mackenzie? What

55:03

they will do is respond to market forces.

55:06

What I hope they do would be to

55:08

fix themselves as you might

55:10

um hope for as well, independently

55:13

and separate for starters in

55:16

a first responder sense,

55:18

stop the bleeding, So stop

55:21

serving clients on topics

55:24

and This is the big distinction. It

55:26

is not an objection to serving fossil

55:28

fuels and coal companies. It

55:31

is serving fossil fuels and coal companies

55:33

on things that will make climate change

55:35

worse. And that is the distinction

55:38

that needs to be pulled out. Of Bob's straw

55:40

man fallacy that he published in the Wall Street

55:43

Journal, premise which

55:45

no journalist has the courage to look at,

55:48

is that in his comment, the

55:50

snug premise is like, we go to

55:52

the extractive industries because that's where

55:55

the benefits could be. The question

55:57

within that is when you go to those science,

56:00

what are you doing? And the answer

56:02

to that question is very unsavory.

56:05

And so that is what needs to be pulled

56:07

out. So stop the bleeding in the sense

56:10

of stop serving clients that

56:12

are, we know, on a four degree

56:14

trajectory. Stop serving them on either

56:16

a business as usual projects

56:18

to help them enable that four degree strategy,

56:21

or worse um have them do

56:24

basically work that is turbo charging

56:26

the problem and making it worse. I

56:29

also want to make clear

56:32

it's not that forces within the firm are not trying

56:34

to drive the change. There are many many

56:36

people who struggle with

56:38

this, who are advocating for

56:40

the firm to do more on this.

56:44

So I am hopeful that

56:47

this disclosure, this attention provides

56:51

them the fact base that

56:53

they need to sort of progress

56:55

things. Mckinseie does incredible mark

56:57

helping clients de carbonize. We are

57:00

I would say the sustainability practice

57:03

quite specialized in that the question

57:05

is can we can we continue to be able

57:07

to do that with knowing

57:10

what we know? As reported in the Times,

57:12

The points that riz One

57:15

and I are making, if I can put words

57:17

in his mouth, is that mckensey

57:20

does a lot of good and there is a lot

57:22

of stuff that is not

57:25

inherently immoral. You

57:27

know, if you look at if if you look at the portfolio

57:29

of clients and the type of work that I would see

57:32

coming across for projects,

57:34

a lot of it is pretty hum drum

57:36

corporate stuff. How do you improve

57:39

second line risk at a health

57:41

insurance company? How do you offshore

57:44

pet food to another country so they

57:47

don't have to pay high taxes in this country.

57:49

So there's a lot in the middle that's just

57:52

this is just business work. But

57:55

it is in some instances, whether we're

57:57

talking about opioid makers, whether

57:59

we're talking about turbo charging

58:01

the climate crisis or helping the

58:04

defense industry at times

58:06

when the wars in which they are fighting are

58:08

indefensible. Uh,

58:11

those are the topics that they should take

58:13

a harder look at. So this isn't a wholesale

58:16

you know, the consulting industry is broken

58:18

completely, but there are aspects

58:21

that are broken and it leads to really

58:23

horrendous and dreadful second and third

58:25

order consequences. All right,

58:28

my turn, from the naive

58:30

perspective of not having been in

58:32

the belly of the beast, I

58:35

I truly believe this that we are

58:37

at an inflection point in capitalism.

58:39

And I think that the form of

58:42

capitalism that we have practiced for

58:44

you know, the last I don't know, five

58:46

decades, I call predatory

58:49

capitalism, but a gentler

58:51

name for it would be shareholder capitalism.

58:54

You know, this idea that the sole purpose of an organization

58:57

is to enrich shareholders. That idea

58:59

needs to go. And

59:01

I believe in a new form of

59:03

capitalism that's now referred to sometimes

59:06

as stakeholder capitalism, that acknowledges

59:08

that, instead of existing exclusively

59:11

to enriched shareholders, corporations

59:13

actually exist to serve multiple stakeholders.

59:16

Their employees, other members of their

59:18

supply chain, the communities that they do business

59:20

in, um as well

59:23

as the planet and

59:25

and I. It is just a fact

59:27

that there is no company better position to lead

59:29

capitalism in this direction than McKenzie.

59:32

Taking an optimistic point of view here, McKenzie

59:35

has the biggest opportunity of the firm's existence

59:38

sitting right in front of it to truly

59:40

live its purpose and help all companies

59:42

everywhere see that we are, like

59:45

really at a turning point for humanity,

59:48

and the challenges that corporations face today

59:50

to make the changes needed to save

59:53

all of us are really

59:55

complicated and really difficult.

59:58

Take for example, s an ability.

1:00:01

Just the task of remaking global supply

1:00:03

chains to achieve a truly circular

1:00:06

economy is work that no

1:00:08

single company could possibly take

1:00:11

on alone. No client can do that

1:00:13

alone. So who would you call to do that

1:00:15

work? Only a company like McKenzie

1:00:17

could help its clients, you know, truly

1:00:20

collaborate to take that on. And

1:00:22

so let's imagine for a second

1:00:24

world in which in which McKenzie

1:00:26

pivots to taking responsibility for

1:00:28

helping all companies everywhere actually

1:00:31

make this shift. That would

1:00:33

be positive. It would certainly be enduring,

1:00:36

and as both of you have pointed

1:00:38

out right in the War for talent,

1:00:41

Mackenzie would win hands down with

1:00:44

that strategy. And the alternative

1:00:46

is for Mackenzie to cynically

1:00:48

continue to mouth the words about purpose

1:00:51

and being purpose led while just

1:00:53

continuing business as usual, helping companies

1:00:55

maximize short term profitability. And that's

1:00:58

definitely not positive and I

1:01:00

honestly don't think it's going to endure

1:01:02

either. Thoughts

1:01:04

on that, So, t I appreciate the

1:01:07

framework, and I would say you're

1:01:09

you're totally right right the sort of freedmanesque

1:01:12

neoliberal era that

1:01:15

we have lived through that has wrought the

1:01:17

things that we see today. You know, I

1:01:19

don't talk to many people who don't think that, you

1:01:21

know, things are working really well and like,

1:01:23

you know, stuff is awesome,

1:01:25

everything, everything is awesome.

1:01:28

And I don't talk to a lot of people like that. I think

1:01:30

the vast majority of people I speak to, you

1:01:32

know, more or less understand that this

1:01:35

this sort of system of incentives is not working.

1:01:37

It leads to a lot of the externalities you've spoken

1:01:39

about in this conversation, and you

1:01:41

know, there's an awareness that is changing that said,

1:01:44

I I take issue it's sort of adding prefixes

1:01:47

to the word capitalism as that changing

1:01:49

sort of the core structure of

1:01:51

how we organize our society. Right, capitalism

1:01:54

is capitalism. It operates under a system

1:01:56

of incentives. Until you ascribe

1:01:59

the incentive is it cannot function. So

1:02:02

to me, the question is what will

1:02:04

create the structural incentives. I'll give it a specific

1:02:06

example. There's quite a lot of bluster

1:02:10

with regards to climate and sustainability.

1:02:12

You've talked sensibly on your show about greenwashing.

1:02:15

If you take, for example, the list of entities

1:02:17

that have committed to a science based target, just count

1:02:19

the amount of fossil fuel companies. I think you wouldn't

1:02:22

even get to ten. The vast

1:02:24

pority of those companies are food, beverage

1:02:26

and consumer companies. Why because

1:02:29

consumers are far more aware and are

1:02:31

creating the consequence where they're desiring

1:02:33

this change. I think such consequences

1:02:37

do not yet exist in a material fashion

1:02:39

for fossil fuel industries. If, in fact, we

1:02:41

see the opposite. You see the Ukraine

1:02:44

War, you see Germany, that sunset, it's nuclear

1:02:46

plants in after for Kushima now repowering

1:02:48

coal plants. You see, you know, record

1:02:51

profits being posted by all and gas companies.

1:02:53

In fact, I would say we're going in the opposite direction.

1:02:56

Do we really expect a

1:02:58

private sector professional services

1:03:01

firm to go to the sea levels

1:03:04

of hydrocarbon entities

1:03:06

and to inform them that they should decarbonized

1:03:09

when they are posting record profits?

1:03:11

Do not see all the prices going down?

1:03:14

And McKenzie or others entities

1:03:16

like it, you know, have the chance of making

1:03:19

exceptional amounts of feast from such work.

1:03:21

You're saying, my ideas is naive,

1:03:24

and I acknowledge that. However,

1:03:27

would you acknowledge that if

1:03:29

McKenzie is in the business of trying to

1:03:32

help actually save the

1:03:34

oil companies and the coal companies

1:03:36

that they are consulting for, that

1:03:39

it would be better advice to

1:03:41

begin a transition away

1:03:44

from fossil fuels as fast as

1:03:46

they possibly can, because it

1:03:48

will take them a long time to get there, and

1:03:50

we don't have a long time. And the

1:03:52

alternative is that

1:03:56

government steps in and buys

1:03:58

them, you know, essentially turns them into

1:04:00

government utilities and then shut them down,

1:04:02

right like or or do

1:04:05

you think we're just going to spin off the edge of the cliff

1:04:07

with capitalism running at full speed?

1:04:10

Like what what is the alternative.

1:04:12

I do believe that a combination is

1:04:15

needed. Um. I think the private

1:04:17

sector needs to see that eventually

1:04:20

there are things that they will

1:04:22

have to contend with. So what

1:04:24

position would they like to be in after those

1:04:26

consequences have occurred, and

1:04:28

after there is some level

1:04:31

of accountability held, what side

1:04:33

of the house would they like to be in. I am hopeful

1:04:36

that with increased awareness there is

1:04:38

some accountability, but in my opinion that

1:04:40

accountability is highly unlikely to come

1:04:42

from actors at the top that

1:04:44

profit the most from the status quo.

1:04:47

I think that accountability is far more likely to

1:04:49

come through the bottom, through employees

1:04:53

sort of holding their leader's accountables, through

1:04:56

public sector entities, through states,

1:04:58

attorneys generals hold identities

1:05:00

they work with accountable, through regulators,

1:05:03

so on and so forth. I would also

1:05:05

disagree in part with the

1:05:08

framework that we should put the onus on business

1:05:11

to make the changes that we need

1:05:13

in the world. They're not going to. And

1:05:15

if you think about businesses

1:05:17

as a bell curve of adoption, where

1:05:20

there are some the frontier,

1:05:23

you know, five percent of the company's let's just say,

1:05:25

you know, the Patagonias of the world, they

1:05:27

are actively making it part of their business

1:05:29

model. It's also a

1:05:31

type of good that is very visual

1:05:34

and that people want to present to

1:05:36

the world as I'm going to signal

1:05:38

to you that this is what I care about, therefore

1:05:40

I buy this. Now, does that same person

1:05:42

think about the installation that's

1:05:44

in their home? You know, all of

1:05:46

the other sort of hum drum goods

1:05:48

that you're buying. Are those

1:05:51

looked at with the same level of scrutiny and

1:05:53

the answers not. And therefore those businesses

1:05:55

and those industries are not incentivized to

1:05:58

change as quickly as those that

1:06:00

are more susceptible to not being

1:06:03

purchased because of the way that things

1:06:05

are made. So in the bell curve

1:06:07

of adoption, you will get the front

1:06:09

runners who will change on their

1:06:11

own. There will be others that

1:06:13

will, you know, receive pressure because employees

1:06:16

won't want to work for them because they care about

1:06:18

these issues. But that's still probably isn't

1:06:21

the majority, at least not now,

1:06:23

and so if you're trying to rely on that

1:06:25

framework to get the change that we need

1:06:27

in the world, it's going to fail. So,

1:06:30

I mean, my perspective is that this

1:06:33

is not a referendum on capitalism,

1:06:35

and that McKenzie shouldn't be held

1:06:38

up as it is good or bad,

1:06:40

because whether or not we like Milton Friedman

1:06:42

or not, it is that capitalism

1:06:45

today does not accept and acknowledge

1:06:47

negative externalities and those need

1:06:50

to be priced in in order to achieve

1:06:52

wholesale change. So that is the carbon

1:06:54

tax. You know, businesses that

1:06:58

operates by omitting a lot of cars are

1:07:00

been and don't want to spend the capex

1:07:02

to completely overhaul their business are

1:07:05

not incentivized to push that. And that's

1:07:08

exactly what Rizwan was talking about. If you get in

1:07:10

the room with someone who is not

1:07:12

incentivized to make that change, will be very

1:07:14

difficult to change them from the outside

1:07:16

as a third party advisor. And

1:07:18

so I mean, the the onus I believe

1:07:21

is uh, you know, on government to change

1:07:24

the policies. If if McKenzie

1:07:27

was as fearful of getting

1:07:29

sued by Maura Healey and the Massachusetts

1:07:32

State Attorney General as they as they

1:07:34

were from the opioid crisis

1:07:36

and paying over six million dollars

1:07:38

for turbocharging opioid sales,

1:07:41

if that same risk applied

1:07:43

for climate change, they would change very

1:07:45

quickly. So, in a long

1:07:48

answer, the market does what

1:07:50

the rules of the game allow them to do

1:07:53

so. If you change the rules of the game,

1:07:56

the companies that are playing in the game will also

1:07:58

change their behaviors. There are

1:08:00

so many things I would love to ask

1:08:02

you and continue this conversation. Has

1:08:04

been a fantastic conversation, but

1:08:06

I have to wrap up with one last question

1:08:08

for both of you. Mackenzie

1:08:10

says that its purpose

1:08:13

is to help create positive, enduring

1:08:15

change in the world. And we have a tool on

1:08:17

this show called the BS Index. It goes

1:08:19

from zero to a hundred, right,

1:08:22

zero being the best, zero bs

1:08:25

being the worst. Total BS. What

1:08:28

score would each of you

1:08:30

give Mackenzie, Eric, I'm gonna

1:08:32

ask you to go first. Well, I

1:08:34

mean, Mackenzie loves a good twenty, so

1:08:37

I'd give them an eight on this one. And

1:08:39

the reason I would provide

1:08:42

a score of eighty is the asymmetry

1:08:44

of the damage. It is again

1:08:47

not denying that there is a tremendous amount of

1:08:49

positive good that they have

1:08:52

done and continue to do, but

1:08:55

on these this particular topic where

1:08:57

they've been serving the fossil fuel industry

1:09:00

for reported seventy years, the

1:09:03

magnitude of that damage far

1:09:05

outweighs and outpaces the benefits

1:09:08

that are provided to your local health

1:09:10

insurance company or another financial

1:09:12

institution. So to say that

1:09:14

that is long term positive um

1:09:17

is hard to believe. Fair enough,

1:09:20

thank you for that, Eric riz One.

1:09:23

Well, if you read my email, you probably know the math.

1:09:26

It's pretty similar to Eric's with regards

1:09:28

to emissions. It's quite simple math. The

1:09:30

six hundred sustainability projects

1:09:32

that Bob coded in his Wall Street Journal article.

1:09:35

If you put those on one side, and the emissions they abated,

1:09:37

and if you put the emissions

1:09:39

that we have served even on the same

1:09:41

time horizon, if we were to be charitable

1:09:44

and then put the outlook forward

1:09:46

looking for those entities and continue to serve

1:09:49

them. And however many projects m cain see

1:09:51

holds and sustainability, I

1:09:53

would suspect any reasonable

1:09:55

approach, any reasonable even the most charitable

1:09:58

one, would show you the same outcome,

1:10:00

probably significantly

1:10:03

worse. So what score

1:10:05

does that lead to in your mind?

1:10:08

I would love for the firm to do that

1:10:10

accounting and tell the world what the score

1:10:12

is and be honest about it here too. Here I'm

1:10:15

unfortunately unable to say because I know exactly

1:10:17

what that score is, right, But

1:10:19

I mean, I'm asking you for a BS score

1:10:21

for mckensey, like how big a bullshit or

1:10:24

is mackensey when they say that they're out to

1:10:26

create positive, enduring change in the world. With

1:10:29

all the due respect to my colleagues,

1:10:31

particularly in the sustainability practice, who

1:10:33

would like to see that, I would suspect that

1:10:35

many of them in private would agree that

1:10:38

it's a t percent bullshit. I'm

1:10:40

very inspired by both of you and

1:10:43

and I very much appreciate

1:10:45

your coming on the show today. So thank you

1:10:47

both for being here. Thank you Ti,

1:10:50

Thank you Ty.

1:10:55

I'd like to end the show by giving mackenzie

1:10:57

an official bullshit score. McKenzie

1:11:00

is saying their purpose led and clearly

1:11:02

are not. That's bad. They

1:11:05

also claim to be in the business of helping

1:11:07

other companies become purpose led.

1:11:10

That's even worse because

1:11:13

they're getting purpose so wrong, and

1:11:15

because if they decided to get it

1:11:17

right, they could do so much good.

1:11:20

I'm giving mackenzie an that's

1:11:23

the highest score we've given to date.

1:11:26

To weigh in with your own score, visit

1:11:28

our website Calling Bullshit podcast

1:11:31

dot com. We'll track McKenzie's

1:11:33

behavior over time to see if they decide

1:11:35

to bring that score down you'll

1:11:38

also be able to see where Mackensey ranks on

1:11:40

BS compared to the other companies

1:11:42

and organizations we featured on the show

1:11:45

and to global managing partner Bob Sternfeld's

1:11:48

if you heard anything on this episode that you'd

1:11:50

like to discuss further, you have an

1:11:52

open invitation if

1:11:59

you are starting a purpose led business or

1:12:02

thinking of beginning the journey of transformation

1:12:04

to become one. Here are three things

1:12:06

that you can take away from this episode.

1:12:10

One, purpose matters.

1:12:13

It's not marketing, it's not fluff.

1:12:15

It's not a cynical way to trick young people

1:12:17

into joining your business. Purpose

1:12:20

is a key ingredient in driving a transition

1:12:23

to a new and more sustainable global

1:12:25

economy. It honestly

1:12:27

hurts my heart that a company like Mackenzie

1:12:30

is using the term so cynically. Do

1:12:32

not emulate them.

1:12:35

Two, A principle isn't

1:12:37

a principle until it costs you money,

1:12:40

and being purpose led means you don't

1:12:43

take money if it doesn't align with your

1:12:45

purpose. Mackenzie has not

1:12:47

gotten that memo, have you? And

1:12:51

Three yeah worth

1:12:53

repeating, don't talk it until

1:12:56

you're willing to walk it. This is literally

1:12:58

why we started this show saying

1:13:01

it is so much easier than doing

1:13:03

it, but saying it and not doing

1:13:05

it is toxic to your business and

1:13:08

to the world. Don't

1:13:10

do it. If

1:13:15

this episode inspired you to create

1:13:17

positive, lasting change in the world, subscribe

1:13:20

to the Calling Bullshit Podcast on the

1:13:22

I Heart Radio app, Apple Podcasts,

1:13:25

or wherever you listen to people speak into

1:13:27

your ears and friends.

1:13:30

I'd like to ask for your help. If you

1:13:32

enjoy the Calling Bullshit Podcast, please

1:13:34

take a second to rate us on Apple

1:13:36

Podcasts or on your preferred platform.

1:13:39

It helps more people find the show and

1:13:43

thanks to our guests today New York Times

1:13:45

journalist and co author of the new book When

1:13:47

McKinsey Comes to Town, Mike Forsyth,

1:13:50

and former McKinsey consultants Rizwan

1:13:53

Navid and Eric Edstrom.

1:13:55

Learn more about them and get links to their

1:13:57

work in our show notes or at our webs

1:14:00

right Calling Bullshit Podcast

1:14:02

dot com. And thanks

1:14:04

to our production team Hannah Beale,

1:14:06

Amanda Ginsburg, d s Moss

1:14:09

Hailey, Pascalites, and Parker

1:14:11

Silzer. Calling

1:14:14

Bullshit was created by co Collective

1:14:16

and it's hosted by me Ti Mounting You.

1:14:18

Thanks for listening