When McKinsey Comes to Town, with Walt Bogdanich & Michael Forsythe

NIKOLAS GVOSDEV: Good afternoon, everyone. Welcome to this edition of The Doorstep Book Talks. I am your co-host, senior fellow at the Carnegie Council Nick Gvosdev.

TATIANA SERAFIN: And I am Tatiana Serafin, also a Senior Fellow here at Carnegie Council, very excited today to talk to two authors of a book that is such important summer reading—put it on your reading list is what I want to tell everybody—When McKinsey Comes to Town: The Hidden Influence of the World's Most Powerful Consulting Firm, the company, which, if you do not know about, you will learn how much its tentacles are spread across our economy, our politics, and our lives.

Walt Bogdanich and Michael Forsythe are investigative reporters from The New York Times who have done a deep dive—I am going to read from the acknowledgements because I always love starting at the back of the book—"that take a granular look at a major corporation as a way to help readers understand how power is wielded in our society."

I think this is so important for our audience today—and thank you for joining us—as we continue our look at how the United States engages globally and what are the ethical implications of our actions both on a government level and on a business level. As McKinsey is not just a U.S. company, it is a global firm, this has truly global implications.

I want to read one more thing from the epilogue before we get into the nitty–gritty: "One former McKinsey consultant wrote anonymously: 'To those convinced that a secretive cabal controls the world, the usual suspects are illuminati, lizard people, or globalists. They are wrong, naturally. There is no secret society shaping every major decision and determining the direction of human history. There is however, McKinsey and Company.'"

We have many in our audience who are familiar with McKinsey and some who are not. The great part about this book is that you talk about the founding of the company, Walt and Mike, and you talk about its origins and how it began to shape thinking of how corporate America worked and then made its way into state and international government.

I want to start off with: How did you find your way into this book, first of all, and what have you learned? This book definitely has a point of view. I want to start off the conversation with what you learned, and at the end are you optimistic or pessimistic for the future of society, corporate America, and global governments after finishing and following this story?

WALT BOGDANICH: That is quite a lot there. I am an optimistic person, so I would like to think that there is hope for our society. I am also a realist in understanding that there are significant problems that exist, many of which frankly McKinsey contributed to.

We were interested in this company because it was big, it was powerful, and it was secretive, and that is catnip for investigative reporters. So we wanted to know more about what was going on in this black box called McKinsey, and that led us to many different places and many interesting discoveries.

Ultimately, we felt it was a story that needed to be told, and we told it in 300-some pages. It was, I think, ultimately received quite well.

MICHAEL FORSYTHE: I think if I learned anything from it, it is that McKinsey is everywhere. We actually have an extra chapter in the German edition. The Germans wanted an extra chapter about Germany, and the title of that is, "McKinsey Ist Über Alles,"—I am sure I am butchering the German—"McKinsey Is Everywhere."

And they really are. We have these detailed chapters about their work with state governments, work with pharma companies, the Food and Drug Administration in the United States, but also really deep in the weeds in Saudi Arabia, in China, and in South Africa. They really are everywhere. Maybe not North Korea, but maybe that will be coming.

As far as being optimistic, I think one of the ways we were able to write this book is because of the many, many idealistic young McKinsey consultants who were upset at the dichotomy between what the company was saying publicly and what it was doing privately. This got some of them upset enough, concerned, enough to come to us.

I think their idealism—it is hard to make comparisons between generations. I am a child of the 1980s, and I think it was a more cynical time, maybe more accepting of authority, and we did find that the young people in their twenties or maybe early thirties who were coming to us—I don't know if that would have happened a few decades ago.

If anything, that does leave me a bit optimistic that the young cohorts who are coming into corporate America or global corporations may be a little bit more idealistic and less tolerant of real breaches of ethics than perhaps people from my generation.

WALT BOGDANICH: You believe that, Mike?

MICHAEL FORSYTHE: I do. If I sound naïve—and maybe I am naïve—that is all right.

WALT BOGDANICH: Corruption is going to end, in other words, probably because of our book, right? The world will march in a straight line.

MICHAEL FORSYTHE: I am going to have to pull a Gavin Newsom talking to Sean Hannity here with you, Walt. I did not say that corruption is coming to an end. I think that there is more concern.

TATIANA SERAFIN: I love that point because many chapters—we will delve into some specifics for our audience; there are so many great chapters—but I do want to highlight especially the climate chapter, the environmental chapter, because those were driven as to you are reporting by people who did speak up at McKinsey.

For example, let's start with Australia, that chapter on coal mining. The reason I want to start there is because we are currently in a lawsuit. Montana is being sued by young climate activists saying that their state is not doing enough on climate. When I was reading this chapter on Australia and how McKinsey was saying it was going to do better but yet fostering a coal relationship, that really drove people to have thoughts on: Hey, what is McKinsey really doing for climate? Why are they saying one thing and yet pursuing the almighty dollar?

In fact, you have "follow the money" in here—I always say that, and you actually use that term—so that is what McKinsey was doing. But there was this sort of revolt, and it was driven by people seeing what the product of what McKinsey was doing, emailing each other, and publishing it, going out into the media. For all of the vilification of media these days, this is an example of where getting information to the public works and did bring some soul searching.

Can we talk a little bit about that coal connection and possible change that might be happening at McKinsey when looking at climate and sustainability projects?

MICHAEL FORSYTHE: I got just finished telling you how optimistic I was, and now maybe I would say there is a little bit of pessimism that is called for too.

Publicly McKinsey is a very green company and talks about its commitment to finding solutions to get us to net zero. They talk a really good game, but some of its biggest clients are fossil fuel emitters, companies like Chevron.

One of the ones we focused on in the book was this company called Teck Resources in Canada, which I think right now is in merger talks with Glencore. This company blows up mountains in the Canadian Rockies looking for coal for steel mills. The former chairman of McKinsey, a guy named Dominic Barton, who went on to become the ambassador for Canada to China—the ink was barely dry on his leaving McKinsey as managing partner in 2018—when he went to Teck to become chairman.

What do consultants do? We got a little bit of visibility into some of their projects. One of them for Teck was called "drill and blast." There was "coal process optimization." A very idealistic former McKinsey consultant who worked in the Melbourne office, a guy named Erik Edstrom—these guys are extremely bright, extremely analytical, and numbers focused—was trying to do the math on the power of one McKinsey consultant to add literally through their advice megatons of CO2 into the atmosphere. His focus was on this coal mine work that they were doing in Southeast Asia, where McKinsey was touting internally how proud they were that they helped boost the output of a coal mine by 25 percent or so and how this is such a great thing.

There was somewhat of a revolt at McKinsey in the sense that there was a petition that went around, signed by more than 1,100 people at McKinsey, for McKinsey to be much more open and much more transparent about the work it does with the big fossil fuel companies. And it works with Aramco, ExxonMobil, Chevron, all the big guys, and a lot of this work has nothing to do with reducing their carbon output. Far from it.

What was interesting, though—and we actually published a story in The New York Times on this in October of 2021 because we did not feel we could wait for the book, we did not want to hold information on climate back.

McKinsey pushed back hard. The new head of McKinsey, the managing partner, said, "You know, we have got to be brown before we can be green." He is a Rhodes Scholar, so I think he is operating maybe at a mental capacity that I do not understand. I do not exactly understand why you have to "be brown before you can be green," but apparently this is what they need to be. They need to work with the dirty companies in order to get them clean at some point. So there was some strong pushback from them. They did not want to stop working with these companies.

WALT BOGDANICH: In fairness to McKinsey, we should point out, since the topic was raised about the possible impact of people speaking out, McKinsey did finally realize they had to make some changes, and they did it led by the managing partner. The company, he said, would now more closely vet the clients that they take on and put guardrails around questionable requests from these companies. That is what they say—whether that is going to prove to be true over time, who knows?—but I think it is important also to note that the managing partner who pushed for these changes, who felt that it was important for their survival, was ultimately voted out of office after one term, which I guess says something about the rest of the company and its embrace of change. He was the first one to be voted out after one term in decades, so that does not speak well to the future, I guess.

NIKOLAS GVOSDEV: Mike, I wanted to take two threads of something you just said and use that to springboard to a question and comment that I would like to offer.

The first is the idea that a McKinsey consultant would be able to add so much CO2 to the atmosphere. There are hundreds of business management consulting companies, and yet McKinsey seems to have this singular status.

Your point about Rhodes—and I just want to give this as an anecdote—I happen to be one of them as well. Nearly 30 years ago, once I was at Oxford, I started getting in my pigeonhole invitations from McKinsey: "We don't care what you're studying. Consider a career with us." In fact, the joke in my Rhodes class was that for Rhodes Scholars after Oxford one third would go to Yale Law, one third would go to McKinsey, and then the rest would do something else. But there was this idea that Yale Law or McKinsey were pathways to power and influence. If you wanted to be something in the Clinton administration during the Clinton years, you went to Yale Law, but a number of people were hoovered up by McKinsey. It's not just at Oxford or Cambridge, it's at all the elite schools.

We do not talk about Bain & Company. There are all these consultancies, and yet it is McKinsey that draws this. What is it about McKinsey? How is it able to draw this talent? How is it able to gain this influence? Why do so many leading American politicians today—Bobby Jindal running for president in 2016, Pete Buttigieg running in 2020, both McKinsey alum; we look at the McKinsey alum who populate the cabinets of all administrations—what is it about McKinsey that it is able to bring these people in and why do people feel this is a pathway?

Maybe give us a sense of McKinsey's ability to market itself both to attract this talent but then to go out and get the business that other consultancies do not seem to get, why businesspeople say, "We have to get McKinsey," as opposed to just going through the Yellow Pages and picking any business consultancy out?

WALT BOGDANICH: I can give a short answer, and, Mike, you can add to it. McKinsey, with some degree of credibility, says: "We are the best in the world and the most successful in the world, we hire the best and the brightest, and we have a long record of accomplishment." People want to be associated with that, understandably. You work hard to study, become recognized, and be successful in what you do, and you want to go to the best.

That is why we picked McKinsey as opposed to another consulting company. We could have done that. It would have diluted our research to the point that it would have made us, I think, a little more uncomfortable because we do not have time to investigate every consulting company, so we picked the best.

By their own definition they are the best. They have offices in 65 countries. They have billions of dollars in federal contracts. They advise most of the Fortune 500 companies. They advise the Central Intelligence Agency (CIA), the Pentagon, and major governments around the world. Who wouldn't want to work for them? If they had called me, I might have worked for them. I doubt it. You know I am not a Rhodes Scholar, barely a C-average student, unlike Mike, who went to Harvard, who has probably a better grasp of those things.

Mike, why don't you take it from there?

MICHAEL FORSYTHE: Speaking of Harvard, McKinsey is a lot older than their main competitors—we call them the MBB consulting firms—McKinsey, Bain, and Boston Consulting Group (BCG). BCG and Bain came along much later. McKinsey was founded by a guy named McKinsey, but he actually died at a very young age in the late 1930s, and there was a gentleman named Marvin Bower, who lived a very long time, almost to 100 years old, who really ran the firm for a couple of decades. He had extremely high standards and, as best as we can tell, was an extremely ethical person in some ways, and he started this symbiotic relationship with the Harvard Business School back in the early 1950s, recruiting people right out of Harvard Business School, when most people did not even know what a business school was.

He was a graduate of Harvard Business School, and they particularly focused on what are called the "Baker Scholars,"—the top 5 percent of the Harvard Business School class.

This was going on more than a decade before Bain and BCG were ever created, so McKinsey had these high-profile consulting/advisory work with the Eisenhower administration at an early age. So I think it had a lot of momentum. That prestige over the decades was already built up before the new guys even came onto the scene. That may be one of the explanations of why McKinsey is so prestigious.

I have to say I started making a spreadsheet—in the best McKinsey fashion—of all the Rhodes Scholars who had gone to McKinsey, and I had to stop; there were just so many. As you said, there is a special program at McKinsey to recruit Rhodes Scholars. So people like Pete Buttigieg were approached for this while he was at Oxford and two of the last three managing partners at McKinsey have been Rhodes Scholars.

Their recruitment—and I think Walt is going to talk about this—is actually one of their strongest points. They have a very strong recruiting program at these elite institutions.

But that is also, I think, one of their weaknesses because their pitch is that "if you come to work for McKinsey obviously this is your ticket into the world of power and elites, but it is also a place where you can make a big difference—say, on the environment—on these altruistic, very positive things that you could do as a McKinsey consultant."

But then, oftentimes when these newbies come there as an associate or even a lower-level business analyst, that is not the work they are doing. They get discouraged, they get upset, and some of them come to us.

WALT BOGDANICH: McKinsey is very skilled at recruiting, and one of their big pitches is their value system, and they post their values on the walls of every office around the world.

The first, above all the most important, value is to "serve the client first above our own interest." That may sound wonderful on the surface of it, but when you think about it, if the client is Purdue Pharma pushing opioids in the middle of an opioid epidemic and the client wants you to find ways to sell more of it to vulnerable people, that is not a good thing.

So, while they are able to recruit people based on their values, I think it behooves the people who are listening to that to look beyond that and to figure out what exactly these values mean, what they stand for, and how they play out in real life.

TATIANA SERAFIN: I would like to look at those values in the context of some relationships. For example, we can start with China because one of the images that I could not get out of my head is the image of McKinsey partying—because there are values and there is money, these consultants are paid a lot of money—a couple of miles away from Uyghur camps in China, and the complicated relationship with advising Chinese companies and working for the American government at a time when we are frenemies at best and in severe conflict at worst.

I think there was a little footnote, Mike, of you talking about your time in the South China Sea and now seeing the islands being built up there by China, and that had something to do with McKinsey. So there is "client first," but there are also values of international relations. Where does that fit, and what did you find in terms of how McKinsey is able to justify some of these working relationships with authoritarian regimes?

MICHAEL FORSYTHE: It is a very good question. McKinsey is a huge company. It has been many decades that most of their partners I think have actually lived outside of the United States and not in it, so it is truly a global organization; but its roots are in Chicago and New York, so it is still in many ways an American company.

But, because it is so decentralized, because this guy Marvin Bower, the kind of "godfather" of McKinsey, modeled the company on a law firm format, where you have these highly autonomous regional offices, in China it is very localized. The partners and senior partners are Chinese, which make a lot of sense, highly educated Chinese people, some of them being Baker Scholars who went to Harvard Business School, but Chinese. Sometimes they may not see going to Xinjiang and partying a couple of miles away from a Uyghur detention camp as being a problem. Quite the contrary, they would see it as, "This is something the Chinese government wants, they want companies to get there and show that Xinjiang is open for business and a wonderful place," and they thought it was perfectly fine.

They may have missed the forest for the trees. That is the same kind of attitude, I think, that allows them to think they can go work for a company like China Communications Construction Corporation, which is helping to build those islands in the South China Sea. They own a dredging arm, so some of their dredgers were dredging the sand off the floor of the ocean to build these islands, and McKinsey was advising this company at the very same time they were doing this and at the very time they were advising the Pentagon, which saw these islands as a threat. It gives you an idea of the global reach of McKinsey and that some of its work is totally at odds with each other and in conflict.

To answer your question on how they can justify it, I think it is this decentralized nature of the company. You see it in China, you see it in Saudi Arabia, and you certainly see it in Russia. It is okay to work with the governments there. For example, in Russia you have two sons of Aleksandr Solzhenitsyn who are working as senior partners at McKinsey.

WALT BOGDANICH: For a long time, McKinsey did not want to work for foreign governments or even governments in the United States, believing that change was more difficult to accomplish, and one can understand that. The political process is messy, it's complicated, it's not as easy as in private corporate life where a couple of people make decisions.

It took them a while to decide to do that, but once they did—and this is in the context of seeing their competitors challenging them for supremacy—they decided they needed to expand, and expand they did. They went to work for governments and threw themselves in totally.

Like in South Africa, where I went to look at it, when the consultants went in there after apartheid ended, they came in with the best of intentions. It was an exciting place to be: "We're forming this new government, this new experiment, making up for decades of terrible treatment of the country's population."

Eventually, though, they began to realize that there were big profits to be made working for the government, and they did so in a way that did not involve adequately vetting their partners, who ended up being corrupt. It ensnared McKinsey and at the time was the worst scandal in its history. That was later surpassed by the opioid scandal.

We know the story of money and its effect on people, and McKinsey wanted money and senior partners wanted money, so they will go where it takes them. And sometimes it takes them to very dark and bad places, as I found in the Ukraine under the former Russian-leaning Yanukovych who was forced out in protest, McKinsey worked for him, advising him.

It seems like they would work for just about anyone, which explains—and I will shut up after this—why they were advising the LIV Golf tour with the Saudis. With the controversy that we are following in the media right now, why are they having anything to do with that government, with Mohammad Bin Salman? This is the guy who chopped up a journalist, and they do not seem to have a problem with what one could call "sportswashing," to overuse that cliché, but it is a way for him to scrub up his reputation and make him more acceptable for the rest of the world, and McKinsey is there to help if they get paid enough money.

NIKOLAS GVOSDEV: Walt, listening to you describe that, I was flashing to descriptions we have heard of Drexel under Michael Milken in the 1980s, which was this idea of, "Open up new revenue centers, break new ground."

Is part of this driven by—Mike, going to your point about a decentralized law firm—people essentially having a mandate: "Hey, if you can go find the business, go out, shake down the trees, and see what clients you can generate, and you have our blessing to go do that."

The other side of it is you are talking about going in to advise Yanukovych in Ukraine, advise the Saudis, advise the Pentagon and the CIA, who already have enough "Beltway bandits" out there. When you hire McKinsey, what is it that a government is expecting McKinsey to do? Is it simply that they are going to come up with a 500-page plan, or do they also have a sense that McKinsey has this broad network of current and former associates and that yes, they are a business consultancy, but, Mike, as you were saying, they have been around for a long time, they have a lot of alumni and a lot of connections? Is there a sense that a McKinsey consultant can maybe get things done for you in a way that consulting firm X cannot simply because they can tap this worldwide network?

WALT BOGDANICH: A brief answer and then, Mike, take it from here. I think they view McKinsey as an extension of the U.S. government, and I think that is encouraged by McKinsey. "They have so many contracts with every branch of government and they are so connected to the people who make decisions in government, why not hire them? They can get things done." I think that is one reason.

Mike, what do you think?

MICHAEL FORSYTHE: I was in the U.S. military, in the Navy for many years in the 1990s, and I came across some consultants—not from McKinsey—in the course of my work. Not to generalize too much, but I think there is a big difference between a regular old "Beltway bandit" consultant and a McKinsey consultant. I do not mean to sound like a McKinsey recruiting ad here, but they work their butts off. I think their level of intellect and the pure grunt work that they put in do sometimes differentiate them from a "Beltway bandit" consultant, and I am thinking of one in particular that I ran into when I was in the Navy.

It is a different culture. Some of the problems that they are tasked to solve are actually very similar to what any consultant would be doing, and sometimes it is quite small scale: "How can this government agency or this department of the Pentagon save $25-50 million? Let's think of ways we could do that." But there are other issues: "How do we speed up the deportation process for Immigration and Customs Enforcement?" These are also problems that they look at.

I think a lot of times there are small-bore problems but there are also big-concept issues that they are looking at. They are management consultants, after all. They are not technical consultants usually, although that is a big trend going toward implementation, and McKinsey is going along with that as well.

I don't know if I answered your question, but I do think there is a difference and that may be part of their attraction. Certainly our book is extremely critical of McKinsey, but I think Walt and I both have come across some incredibly powerful intellects that we talked to in the course of our reporting there, some of the smartest people I have ever met.

WALT BOGDANICH: Beyond intellects, though, I think it is important to point out that as we have gotten to know so many current and former McKinsey people, they have turned out to be really nice people, the people you would want to have as friends, and I do have several of them as my friends. They are not only supremely smart, but they are also good people by and large.

We never meant to set out nor did we conclude that this firm is evil. They do some stupid things, some unwise things, that they now recognize, maybe not as much as they should, but they do not do it out of malice. I don't know why they do it. They do it for the money. Maybe they do not realize that they are doing it. At any rate, this is not an evil firm. It is a firm with problems that it needs to address.

TATIANA SERAFIN: If I can disclose, as a former management consultant, I want to talk about the industry as a whole. McKinsey does have a vaunted place, but I think the industry itself is set up to rely on young people going into an industry they do not know about to give advice to people who have worked there forever, and that is a terrible model.

The senior partner, who has the intellectual power and who you want to be friends with, leaves and you are left with twentysomethings who do not know what they are doing, and hundreds of them sometimes. In your book you have some examples where hundreds of people would descend on a government agency and literally tell the time to a person with a watch. That is the famous cliché.

I think that there might be some sort of structural problem with this industry that maybe needs to be addressed. You detail some of the unsuccessful projects, such as the focus on cost savings at Disney or what Saudi Arabia was doing with surveillance. There are projects that do not benefit anybody in the long run, and I think there might be a structural problem with the consulting industry in general.

That is kind of a meta question, but I think to put some context around what McKinsey does: Does it really add value or not? I think there is a bigger consulting industry structural problem: What are companies really looking for when they bring an outsider in to tell them what to do better with their business and the countries as well?

NIKOLAS GVOSDEV: A question has come through the chat as well, which is the extent to which McKinsey represents the industry as a whole, so I think that blows in well.

Go ahead, Walt.

WALT BOGDANICH: Consultants very often are brought in to justify decisions that the chief executive officers (CEOs) or the leaders of a country do not want to make, don't want to be blamed for, or don't want to suffer the blowback from. So they are brought in with a specific purpose, and that purpose is not necessarily to find the truth; it is to carry out the wishes of the CEO or the government leader.

As an aside, Tatiana, you brought up the whole fractured model, bringing in kids—smart as they may be, young they are—to come in and tell veterans in an industry how they should behave and the decisions they should make.

The one incident that I keep thinking about—and there are many in the book that we describe—is when they were brought in to teach the New York Knicks how to play basketball. Now think about that for a moment. I don't think McKinsey is a big basketball factory, but here they brought them in, and the players were just befuddled. The owner of the team had an idea of what he wanted done and brought them in to carry that out. I have to say in the ten years or so afterwards they did not win that many games, so whatever it was, it did not work very well.

MICHAEL FORSYTHE: Getting at your value-added idea of McKinsey, I think one of the things McKinsey has done since its creation is that it has been this disseminator of information, whether it is the latest management fad or something more concrete. Early on in its existence, it was basically telling the world, especially a lot of postwar European companies, how to replicate the management structure of General Motors or General Electric—called the multi-divisional or M-form management structure—and you see that now: when there is a big trend, they are all in it.

Right now it is artificial intelligence (AI). If you see the McKinsey emails, which Walt and I both get, it is "AI this,| "AI that." They are always working on the next big thing.

But sometimes those next big things really do have some social harms. One of the big things in the 1990s they were all in on and putting in slide deck after slide deck was offshoring, which obviously has some benefits for corporate America in reducing their costs but also had some big drawbacks as far as deindustrialization and increasing wealth disparities in the United States, which have led to some pretty upsetting political outcomes as well.

I don't know if that answered the question, but I think that is one of the things that consultants have done, being a disseminator of information.

Also, consultant after consultant at McKinsey has told us that McKinsey is an accelerant: You put this brainpower at work on these specific problems, and they can make a difference. But if that brainpower is used for a malign end, then—as Walt said, it is not like they are doing this out of malice, it is just that they are all in helping their client—but if their client is not a good actor, that can cause some real harms, and we have seen that time after time after time.

NIKOLAS GVOSDEV: If the client wants to, as you said, improve the speed of deportations, wants to improve surveillance of dissidents, or wants to speed up the process of a repressive act, that has an issue there.

I was struck by something that you were saying before because I think you see this a lot, the idea that consultants are brought in because the CEO or the leader wants to do something but does not want the responsibility, so the consultants can become the bogeyman or the scapegoat if something goes wrong.

I was thinking just again from a couple of years back the George Clooney Up in the Air movie, where he is the firing consultant; because the company does not want to fire people they, bring in a consultant to do the downsizing.

Are there examples where either a company really has no clue and they come to McKinsey and say, "We have no idea what we are doing," or where McKinsey has come in and has changed the mind of a corporate leader or someone else who said, "I was really dead set on doing this, I brought you guys in to confirm my direction, but in fact you have convinced me to do something else." Does McKinsey have some of those wins it can point to of "We changed a CEO's mind" or "We moved a decision in a different direction?"

WALT BOGDANICH: I am sure there are examples. I cannot think of them right now. Mike, maybe you know of some.

We did work on this for years and, as we pointed out in the book, we interviewed more than a hundred current and former McKinsey employees. I cannot say that I ever found a really concrete example of some CEO telling us, "Oh, my goodness, I was lost and then I am found because McKinsey led me out of the woods to the promised land." I just have not seen that that often.

Do you know of any?

MICHAEL FORSYTHE: I think sometimes they do come in and they would call it—and all consultants call it this—"business transformation.| It is not like you are coming in maybe to shave off a hundred jobs or so, but you are there to maybe restructure the company's focus and everything. That is a very different thing from just going in and helping give cover to a CEO for job cuts or something.

One of the examples we write about in the book is Allstate, the insurance company, where they come in and reimagine in some ways the whole business model of insurance and really focus on changing the way claims are paid out, especially for auto claims. This work is a few decades old, but it does go to show you that it is not just about going in and justifying a CEO's job cuts. It is also going in in some instances and wholescale reworking the plumbing of a company. So there certainly is that.

TATIANA SERAFIN: One of the things that struck me that you write in the book is that this is an industry that is not regulated. That brings some problems. They are not accountable because the CEO is ultimately accountable to the shareholders and McKinsey does not often get the blame. There have not been that many instances—this brings me to Purdue—where McKinsey has taken the blame.

But here with go with what happened with the opioid crisis, and now they are in litigation. They had state litigation—you talk about that in the book—and there is federal litigation. I just read about Canada trying to sue McKinsey. Is this a mea culpa moment for McKinsey?

WALT BOGDANICH: No, I don't see it that way at all. What it is is a validation of their belief that money will get you anything you want, and what it got by paying $600 million was to get all of the lawsuits to disappear and to call off the dogs and not be prosecuted. It is the same thing they did in South Africa when they got embroiled in this scandal and ended up saying, "Oh, we'll pay back the $100 million we got in contracts."

So I don't see this as a "come to Jesus" movement here by McKinsey. I think they see that money buys their way out of trouble. They are not the first ones to think that. I think there is a certain ex-president who might believe that as well.

TATIANA SERAFIN: Mike, do you have anything to add?

MICHAEL FORSYTHE: No. I certainly think that Walt just hit the nail on the head. They never admitted culpability or any wrongdoing in their settlements with the state's attorney general for Purdue, and the same thing in South Africa.

As Walt said at the outset, they do have this new system for evaluating new work and new clients, but I think the jury is out on whether that is making a difference. We will have to see.

Certainly it is sobering that the managing partner, a guy named Kevin Sneader, who instituted this, was voted out of office. Most McKinsey managing partners get two if not three three-year terms, so nine years is the normal tenure. Kevin Sneader only got three, and that is the first time in 40 years that somebody has not been allowed to have more than one term.

WALT BOGDANICH: One of the ways McKinsey differentiates itself from others is it says, "We are not like Goldman Sachs." Well, it turned out that is where Sneader went after his colleagues voted him out. Well, maybe Goldman Sachs is a nice landing place after all.

TATIANA SERAFIN: I want to go back because I am obsessed with Gen Z and the changes they have made specifically via social media. What I found striking is so many times in the book you mentioned how McKinsey itself uses social media. You mention at one point that McKinsey was following public officials on social media and using Google Search to push down maybe negative publicity about itself, so there are ways which McKinsey is using social media to perhaps glue itself to positive perception.

But also there is this movement, which you also mention, of young people pushing back on some of these ethics questions that come in, saying: "We are more ethical and we are a different generation than the 1980s"—I am also a 1980s child—"the way that we looked at things then."

Do you see a difference coming in? There are fewer people going to college, for example. Maybe that means that there is going to be less of an interest in going into consulting. Is there an undercurrent of change as a result of some of the things that have happened over the last five years, since you have been working on your book, between Saudi Arabia, Purdue, and the Russia war?

WALT BOGDANICH: There have been some layoffs. They will tell you that had nothing to do with the blowback from some of their bad decisions. I don't know whether I necessarily believe that or not.

On the one hand, they laid off people, dismissed a good number of them, and they are telling many people now that they want to hire but that they need to wait for a year before they start work. So there are changes. On the other hand, they are still recruiting aggressively, and I have no reason to disbelieve that they are going to keep getting the best and the brightest, as they always have.

NIKOLAS GVOSDEV: One of the questions that has come in from the audience builds on Tatiana's point about ethics. The questioner asks: "What would you look for, having observed and studied McKinsey, that would lead you to say that they are moving back toward a 'more ethical' way of doing things? Would it be a structural change in the company? Would it be personnel?"

Also linked to Tatiana's point about the demographic changes—fewer people go to college, people are reconsidering—you are also now saying that people are being asked to wait a bit and that maybe the jobs are not there.

This goes to a question from the audience, really the chicken and egg: Is McKinsey still going to pull people from elite programs in because it has this network; or is it a function of, "Hey, good people went there and I want to go there," or if the business is not there or there are other opportunities elsewhere?

And, maybe conflating the two questions and coming back to Tatiana's point, will there be the Gen Z elite that McKinsey has targeted in the past from the elite schools saying: "We don't want to work there. We are not the 'greed is good' generation. We are not the 'Hey, we want to make some money, but really this company is not in line?'"

Do you see any signs moving forward that McKinsey could be headed for major change or that using some of its traditional ways of the people it has been able to pull in they may not be able to pull in because there will be different opportunities, just as we saw with law. At one point everyone wanted to do law, and then that changed. At one point everyone wanted to go to Wall Street, and now it seems, at least for the last couple of years, everyone wants to go to Silicon Valley. Is McKinsey in for a corrective perhaps where people will not want to work for it as much in the future?

MICHAEL FORSYTHE: One of the things McKinsey says itself is that the people they focus on at these elite institutions are people they call "insecure overachievers." The way I see that—and I think, Nikolas, this may resonate with some of your Rhodes Scholar cohorts—is these are people who have been at the top of their game their whole lives, maybe valedictorian of their high school, outstanding students in college, and they went to a Harvard or Oxford or whatever; their folks are proud of them, their family is proud of them. It is such a prestigious thing to go to this great university, to be a Rhodes Scholar maybe; and when they go into the workforce, to an employer, they want a name that is just as prestigious as the university that they attended. They want to continue that.

That is what an insecure overachiever would be attracted to, and as long as there is a supply of those people at Harvard, Oxford, and other places, McKinsey will endure. While it may not be the fad to go to Wall Street now, McKinsey is still a big draw. Even though Silicon Valley, the Apples and the Googles, are obviously very attractive, so too is McKinsey.

Again, this goes back to what I said at the outset, I do think that Gen Z is more idealistic, so I hope that idealism continues to imbue itself in the young cohorts at McKinsey. When people ask us, "Should I take this job at McKinsey?"—I think Walt would say the same thing as I do—I say: "Congratulations. I am glad you got a job at McKinsey. Now do good there."

WALT BOGDANICH: Ask questions.

MICHAEL FORSYTHE: It is not like we are telling people not to go work for McKinsey, but if you do go work for them, you have to be able to look at yourself in the mirror every day. You have to have a good EQ (ethical quotient), not just an IQ (intelligence quotient). I know it is so trite to say that, but I think really the reason McKinsey has gotten into some controversies is that they do lose that ethical picture sometimes.

TATIANA SERAFIN: Speaking of international, because I want to bring this back to how we can engage in world affairs our doorstep, one of the things McKinsey does is it has that McKinsey Global Institute that produces reports and shares information with companies but also shares information with the public.

I am wondering what you think of those efforts of McKinsey being a thought leader in other areas, so not just as having clients but also as a public educator, because it does have an institute that puts out reports. They help its own practice and business, but what impact does it have on society, again to the effect of how we all should be looking at this company, as not just somebody providing services to clients and governments but also impacting us in our daily lives?

WALT BOGDANICH: McKinsey does not advertise, and they have not since the beginning, and they take great pride in that. So how else do they reach the public? They do things like this. They set up this Global Institute, which on any given day may have Position A and the next day Position B that conflicts with Position A. That is what they do, and it is an effective way to get their name out there.

But I really do not think that the McKinsey Global Institute has much impact other than in terms of trying to connect the company to clients. That is my analysis of it, having looked at them for quite some time now. I don't know whether Mike disagrees with that or not.

MICHAEL FORSYTHE: We get back to that word "accelerant." A lot of the big trends that McKinsey is talking to its clients about—like, say, offshoring or asset securitization—the people at the McKinsey Global Institute are writing papers on these things. If you go back and look at what some of the prominent names at the McKinsey Global Institute were writing about up to the Bush administration, a lot of it is the benefits of offshoring, so they are putting more of an academic imprint on these ideas that McKinsey is talking to its clients about.

Asset securitization is another issue. McKinsey did not invent asset securitization, but it proselytized it. Obviously, there are some advantages to securitization and everything, but that financial tool, if abused, which it certainly was in the run-up to the global financial crisis, had an extremely malign impact. The McKinsey Global Institute was talking about this as well. They were publishing books on all this. I guess that is how I view them.

TATIANA SERAFIN: I think that this has been a wonderful talk and we need to keep looking at McKinsey because, as we set out in the beginning, their work impacts us here at The Doorstep and in our day-to-day lives in many ways because they work with so many companies and so many countries; and even if they do not advertise, we here are advertising today what they do and why we need to pay attention.

I want to thank you on behalf of Carnegie Council, Walt and Mike, for doing this important work.

I want to thank our audience for being here today and invite you to email Walt and Mike. Are you guys still on Twitter?

WALT BOGDANICH: Sure.

MICHAEL FORSYTHE: Yes.

TATIANA SERAFIN: I have an ethical problem with you on that, but find them on Twitter, ask them questions, engage in the conversation, and thank you so much for joining us today.

Great book, When McKinsey Comes to Town. Get it, read it, put it on your summer reading list.

WALT BOGDANICH: Thank you very much.

MICHAEL FORSYTHE: Thank you for having us.

NIKOLAS GVOSDEV: Thank you for joining us.