♪ ("LAST WEEK TONIGHT"
THEME PLAYS) ♪ Our main story tonight
concerns business. A word that somehow describes
the front part of a mullet, the second nicest seat
on an airplane, and the single saddest room
in any hotel. (AUDIENCE LAUGHS) Specifically,
we're gonna talk about the businesses that make
other business's business their business. Management consultants. There are three big firms. And tonight,
we're gonna focus on the oldest and largest one,
McKinsey & Company. It's been around
for nearly a century advising both big companies
and government agencies on how to fix their most complex
and urgent problems. NARRATOR: McKinsey was founded
in 1926 by James O. McKinsey. He was a professor
at the University of Chicago and an expert
in management accounting. By the 1950s, the firm
was assisting the White House with staffing organization. Which, according to the company,
would lead to the creation of the Chief of Staff role. In 1970, McKinsey helped create
the barcode. -(BEEPS)
-Yes, that barcode. That's actually true. McKinsey did help invent
the barcode. And I know that's
a little disappointing. Maybe you thought
it was invented by a grocer in the '60s
who dreamt of a way for computers to taste fruit. Maybe you thought the beeps
were just how the program says "yum." But I'm afraid that
you're imagining a better world than the one
we actually live in. But it's not just
barcode innovation. Firms like McKinsey sell
themselves as can-do experts who can come in,
provide an outside perspective, and fix whatever ails
a company. Whether it's reengineering
an organizational chart, working on digital strategies, or deciding whether to sell off
part of their business. You name it, they'll advise you
on what to do. And McKinsey's worked
with everyone, from companies like Coca-Cola,
Best Buy, and AT&T to government agencies
like the Department of Defense, and ICE. McKinsey is massive,
and it's ubiquitous. It has offices in at least
65 countries and an annual revenue
estimated at 15 billion dollars. But McKinsey doesn't see itself
as just a bunch of PowerPoint slinging, power suit wearing
micro managers. As you can tell
from their recruitment videos, they see themselves
as operating as a force for good
in the world. Our purpose is to create positive, enduring change
in the world. The work you do with McKinsey
will matter. What we are doing
on a day-to-day basis is really impacting the lives
of thousands of people, sometimes more. What's really great about
McKinsey is it provides you with an opportunity
to work on really hard problems that are also really interesting and also really actually matter. Right. McKinsey consultants are
encouraged to see themselves as world changers. As a humble McKinsey partner
once put it... (AUDIENCE GROANS) Which is a hell of a group
to put yourself in. Look, there's just three
cool guys left in the world now, Henry Kissinger, Kevin Spacey,
and me! (AUDIENCE LAUGHS) And the truth is,
McKinsey's reputation has taken a bit of a knock
in recent years. It's found itself
under scrutiny for everything, from exacerbating
income inequality, to helping market
dangerous products, to enabling
authoritarian regimes. And former employees
have pointed out that for all its talk of making
the world "a better place," it's worked for some of
the planet's biggest polluters while getting hundreds of
millions of dollars in return. In fact, one of those
disillusioned employees paints a pretty damning portrait of what the company is
at its core. They serve a lot of clients
with really harmful effects. They know exactly what
the repercussions are going to be. And then they say,
"We're gonna do it anyway." And that tells you all you need
to know about the firm. Right. That's an inherently alarming
thing to hear about a business,
isn't it? Generally, you want companies
to mitigate harm, not actively seek it out. It's what LEGO has
a choking hazard warning on its packaging,
instead of one that says, "Now with blue raspberry
flavor!" (AUDIENCE LAUGHS) So if it's that influential,
that ubiquitous, and is behind so much harm, tonight, let's take a look
at McKinsey. And if this is the first time
you are hearing McKinsey's name, don't be embarrassed. Because for a company
with so much reach, it's gone out of its way
to try and keep a low profile. It doesn't publicize
its client list and even its offices
can be hard to spot. AMNA NAWAZ: We stopped by
McKinsey's headquarters at 3 World Trade Center
in lower Manhattan. Well, it's such
a powerful company, and yet you'd never know
they were here. There's not a single
McKinsey sign anywhere. Why is that? They don't want anyone to know
anything about 'em. They want everything done
in secret. And if that includes
where they work, then so be it. Well, that's not innately
suspicious at all, is it? You've sealed yourselves
inside an expensive, glass-fronted, nameless lair that is completely invisible
to anyone, unless, that is, they simply
type "McKinsey" into Google Maps or happen to hear
that journalist say, "3 World Trade Center," while she literally showed you
their address. Kudos, by the way.
That was a dick move, and I genuinely appreciate it. (AUDIENCE LAUGHS) But discretion is only part
of McKinsey's brand. They've also cultivated
a reputation for hiring the best and brightest,
fresh out of elite colleges and MBA programs. And young, high-achieving types
often use a stint at McKinsey's as a springboard
to bigger things. Former employees include
Pete Buttigieg, Senator Tom Cotton,
Facebook's Sheryl Sandberg, and Google CEO Sundar Pichai. And McKinsey picks
its consultants through a notoriously rigorous
interview process, asking candidates challenging and slightly unconventional
questions. One of the interview questions
I was asked in my final rounds was how many pigs are in China. Which sounds like
a very silly question, but it's a really good question
to test how you think. Because it's not only--
The answer doesn't matter. It's can you structure
a problem. Can you take
a very nebulous situation, and put structure around it
in a way that makes sense, and then logically deduce things in order to get to an answer
that's meaningful? I mean, sure.
That is one way to describe it. Another way might be to say
that they're just trying to see how good
you are at bullshitting your way to a plausible sounding answer. Because if a business
really needs to know how many pigs are in China,
there are ways to find that out. Like call Chinese port magnate,
Qin Yinglin, or just Google... Or if you're on your phone,
just Google... ...because that's still enough
for it to go on. What do I have to do?
Draw it a map? I'm in a hurry,
my thumbs are fat, and I got places to be." But once they are hired,
McKinsey consultants work insanely long hours
while being schooled in the McKinsey way
of doing things. Something that the firm itself can be pretty insufferable
about. A partner once said... A sentence so smug
that even if you just read it, you'd have automatically heard
my accent in your head. (AUDIENCE LAUGHS) 'Cause that's not just smug,
that is British Empire smug. And the thing is,
that level of swagger might make some sense
if McKinsey's advice was consistently novel
and brilliant. But it's had some big misses. Famously... And McKinsey... ...which persuaded AT&T to pull out of the market
for a while. And to be fair,
McKinsey were only off by around 739 million,
or 82,000 percent. But even when they are
troubleshooting existing problems, their bespoke solutions
can be blindingly obvious. Just watch as one McKinseyite
brags in a promotional video about the firm's ability to
come up with unique solutions. We were serving
an energy client, and their problem was that
they have offshore drilling rigs and they had stacks and stacks
of paper invoices that they would fly out
to these rigs in the middle of the Gulf Coast
in hurricane weather to have to get somebody
to sign off and then helicopter back
to headquarters. We brought in a team
that had partners who were experts
in the energy sector, we had partners who were experts
in procurement as a function. And they were able to
get together with our digital team
and say, "Actually, we don't know if
signatures are really required
for this." -Yeah.
-(AUDIENCE LAUGHS) No shit! I'm not sure it speaks
that well of you that you needed
the digital team and experts in the energy sector
and "procurement as a function," whatever the fuck that means, to get to the conclusion,
"Why not send an e-mail instead of
a fucking helicopter?" (AUDIENCE LAUGHS) And that's not a one-off. Over the years, there've
repeatedly been grumbles that McKinsey oversells
its brilliance. In the words of one
Fortune story, while... And those are just obvious,
first-thought ideas. Essentially,
McKinsey is a firm that projects
a huge amount of confidence to sell a frequently
unremarkable product at sky-high prices, making them truly
the Salt Bae of companies. "You've had salt before. But have you ever had it
from a douche?" (AUDIENCE LAUGHS) And let's-- Let's talk for a minute
about downsizing. 'Cause there is a long history
of companies bringing in consulting firms
like McKinsey and very soon after,
aggressively cutting costs. This gets dressed up
with fancy terms like "finding efficiencies" and "organizational
streamlining." But what that often amounts to
is mass layoffs. And look, layoffs are
sometimes necessary, but they're always painful. And much more painful
than some mid-20s Ivy Leaguer who fancies himself
a business genius might realize. Twenty-four years ago,
McKinsey allowed a documentary crew rare access
to film a training session for young consultants
going through an exercise where they role-played advising
a real-life client. Here they are joking about
how they would break the news that layoffs were gonna
be necessary. We've got a very simple
strategy. Just... (SINGING)
♪ Bum, bum, bum, bum ♪ ♪ Bum, bum, bum, bum ♪ ♪ Hit the road, Jack ♪ ♪ And don't you come back
No more, no more ♪ ♪ No more, no more ♪ ♪ Hit the road, Jack ♪ ♪ And don't you come back
No more ♪ ♪ What do you say? ♪ ♪ Hit the road, Jack ♪ That's not our
communication strategy. Hmm. Look, um, I'm not
a violent person but if all those dickheads
exploded, I would absolutely spin around
singing, "It's Raining Men." (AUDIENCE LAUGHS) But that is emblematic
of a major role that consultants
like McKinsey play. Essentially allowing
executives to say, "I know job cuts are bad news, but it's what McKinsey told us
to do." As one book on the company
put it... Though there is one area where
McKinsey's historically advised the exact opposite
of cost cutting, and that is executive pay. Starting in 1950, a consultant of theirs
named Arch Patton started advising
corporate leaders that they were underpaid. Writing books like... His advice was
so wildly popular that for a time... ...and later came to be seen
as a... In fact, when he was... And while it's hard
to gauge tone from that, I'm just gonna hope that it was
a sober, reflective "Guilty," and not,
as seems much more likely, a naughty, mischievous
"Guilty!" Like you'd use to respond to,
"Who spiked the punch?" So, to recap,
McKinsey's advice can be expensive but obvious, its predictions can be
deeply flawed, and it's arguably helped
supercharge economic inequality in this country. All of which is pretty striking coming from a company
whose leader you've already seen sum up its fundamental mission
like this. Our purpose is to create positive, enduring change
in the world. Yeah, but is it though? Because let's talk about that. A quick look
at McKinsey's client list shows a bunch of companies
going out of their way to do the exact opposite
of "positive, enduring change." 'Cause it's not just those
oil and gas companies that I mentioned earlier. ...well after we knew smoking
caused cancer. And you might be thinking,
"Well, come on, John, it was the '50s,
lots of people were okay with smoking back then." But you should know... (AUDIENCE GROANS) Which is, and this is true,
too late! (AUDIENCE LAUGHS) That'd be like finding out that
Subway dropped Jared's contract
today. "Wait! He was still in commercials
from prison? How could anyone think
that this was okay?" And if you think
that was damaging, McKinsey's also worked
with Purdue Pharma. They actually made
nearly 84 million dollars in fees from Purdue
for advice on how to, quote... "turbocharge" sales
of OxyContin. In fact, listen to the AG
of Massachusetts explain just how intimately
McKinsey was involved in Purdue's sales process. McKinsey consultants
actually rode along with, went with Purdue sales reps
to doctors' offices here in Massachusetts to critique them
on how effective they were on selling OxyContin. It's true.
They did ride-alongs. And honestly,
I didn't think I could have any sympathy
for Purdue sales reps until I learned that they were
trapped in a car with a McKinsey consultant
for hours. "Yeah, you-- you mentioned
that you went to Harvard. Can we please just be quiet
and go sell some poison?" (AUDIENCE LAUGHS) But it's not just
private companies. Remember,
McKinsey's frequently hired by government agencies too. Where, again,
their advice has not brought universally positive change. For instance, in 2014, New York City
brought McKinsey in to figure out how to reduce
violence at Rikers. A project whose cost ballooned
to 27 million dollars. People asked questions
at the time about whether that was
a good use of money. But the head of
the city's corrections back then insisted that McKinsey was worth
every penny. If we made any progress,
it was because of McKinsey's help in areas
that we needed help in. Wow, that is some
high praise there. To claim that McKinsey was
the sole reason for any progress
made at Rikers would be
a pretty impressive compliment if you didn't know anything
about the state of Rikers. So what imaginative strategies
did McKinsey try to implement? Oh, I don't know,
just fun things like... It's some very
outside-the-box thinking for people literally trapped
inside boxes. But its big project was
an anti-violence program called Restart. And it claimed that... Which sounds great. Unfortunately,
it turned out that... Because... ...in the first place. And while McKinsey, to this day,
defends that program and denies skewing the results, it is notable that
when ProPublica later crunched the numbers
for Rikers overall, they found that jailhouse
violence there had actually risen nearly
50 percent since McKinsey began
its assignment. And honestly, you kinda gotta
hand it to McKinsey there. Not many firms can get paid 27 million dollars
of taxpayer money to leave Rikers
somehow even worse. And it's not just jails. McKinsey's government clients
also include regulators, which can get a little weird
when you consider that McKinsey also represents
corporate clients. For instance, remember how
it worked with Purdue Pharma? While it was working for them, it was also working with
the FDA. That sure seems like
a clear conflict of interest. And it was one that even
Mr. Positive and Enduring Change
here found a little hard
to explain to Congress after the fact. KATIE PORTER:
Okay, so let me ask you. Did you disclose to the FDA
your-- McKinsey's work at the same time... Did you disclose to the FDA
that McKinsey was working at the same time
it was working for the FDA that it was working for Purdue? Did you disclose that
to the FDA? We made clear
in multiple instances that the individuals involved
had experience in both pharmaceutical
and opioids-- PORTER: Reclaiming my time. Mr. Sternfels,
they didn't have experience, they were the identical humans
working for both at the same time. Exactly, and there is
a big difference between having experience
working for both and actively working for both
at the same time. It's the same difference
between telling your wife about your ex-girlfriend and telling your wife
about your current girlfriend. One is dramatically worse
than the other. And Katie Porter
was right there. There were multiple instances
of McKinsey consultants working for both Purdue
and the FDA at the same time. At one point... (AUDIENCE GROANS) One project even had them... (AUDIENCE GROANS) Pediatric Oxy! Oxy for kids! You know, just like in that
episode of Dora the Explorer when Backpack is getting
a bit too heavy, and Boots gives her a little
something to take the edge off. (AUDIENCE LAUGHS) Now, McKinsey claims
there was no conflict there and that the nature of their
work for the FDA and Purdue was different. Which is a little hard to take, considering that they sold
themselves to Purdue at the time with the notion that they had
special insights into the FDA. They told Purdue in 2014
that they... Including the... So, hold on, McKinsey.
Which is it, then? Was the work you did
for the FDA totally different, or did it help you bring in
unequaled capability to Purdue? 'Cause it can't be both. This isn't Schrodinger's
contract. (AUDIENCE LAUGHS) You don't get to claim
it's both relevant and unrelated depending on
who the fuck you're talking to. And at this point, I could stop. Tobacco, opioids, Rikers. Those are already
some pretty unpleasant stains on a company's record. But here's the thing. All the examples so far
are just from the US. Remember, McKinsey now has
offices all over the world. And from them,
they have cozied up to some truly terrible clients. They've worked for
a Russian defense contractor and are so deeply entrenched in the government
of Saudi Arabia that Saudi Arabia's
Planning Ministry has been dubbed... (AUDIENCE GROANS) And it will loudly defend
its work there, say that it feels its making
the country a better place. But that feat
of mental gymnastics got a little trickier after Jamal Khashoggi
was assassinated. Just a few months later,
McKinsey's head at the time was on CNBC trying to defend
its work in the country and reassuring everyone
it had a strict moral code. The work that we do here, and we think very hard
about the work that we do, needs to be work that does
make a positive difference. -WILFRED FROST: Sure.
-And that's what I'm focused on. ANDREW ROSS SORKIN:
But straight up and down, doing business with a murderer
is okay by you? No, it's absolutely not. Okay, and when you find out
that your client is a murderer, you do what? -KEVIN SNEADER: You walk.
-SORKIN: You walk? Oh! You walk, do you? That sounds good,
except here's the thing, they didn't walk. Their client killed
and dismembered a journalist, and McKinsey responded
by participating in a major
Saudi investment conference that same month, even as other companies
pulled out. So, unless "you walk"
is short for "You walk to the front
of the line and pick up your lanyard
for another fun weekend at the journalist-choppin'
business jamboree," you are full of shit. But wait, wait.
'Cause it gets even worse. 'Cause it later emerged that
in one of McKinsey's reports, it highlighted three people who drove negative conversation
on Twitter about Saudi government policies. This is that slide,
featuring names, pictures, criticisms and follower counts. And subsequently,
some of those people were, and you're not going to
believe this, targeted by
the Saudi government. In fact,
one of their phones was hacked, revealing communications with,
you guessed it, Jamal Khashoggi. Now, at this point,
I have to tell you, McKinsey insists... And that the deck wasn't
prepared for the Saudi government. In fact, when this story
initially came to light, they said the report's "intended primary audience
was internal" and that they were
"horrified by the possibility, however remote, that it could have been misused
in any way." But come on! It's Saudi Arabia. Even if that report
didn't fall into their hands, and please, what part of
the way Saudi Arabia operates made you think that
a McKinsey-curated list of shit taking dissidents would be a good thing
to put together. You're working in one of
the rootinest, tootinest, journalist-shootinest regimes
in the Middle East. (AUDIENCE LAUGHS) And you figured
it was completely fine to drop a list like this because the potential
for misuse was "remote"? What are you talking about?! This is a government led by
Mohammed bin Salman, a man who, and this is true,
once... (AUDIENCE GASPS) Did you think that if MBS
were to stumble across a list of his haters,
he'd just send them a big "No hard feelings about
all the dissident stuff" edible arrangement? The fuck is wrong with you?! And for what it's worth,
a former McKinsey consultant has called that whole internal
document excuse... And look, McKinsey will claim
that all of the examples I've given you tonight
are just isolated cases. Not representative
of their work overall. What's more, they'll say that
they've revamped their policies on client selection
and that... Although they are
still working in Saudi Arabia, so their standards seem,
at best, fucking flexible. (AUDIENCE LAUGHS) They also want me to tell you
that they do a lot of projects like helping clients deploy
vaccines, or supporting refuges
and rebuilding in Ukraine. Which is very nice,
but think of it like this. How many uplifting McKinsey
projects like... ...or... ...would you need to hear about
to effectively counterbalance... ...and... (AUDIENCE LAUGHS) And look, it's not just
McKinsey with these issues. Their main competitors
have had them too. BCG was also in deep
with the Saudis. And Bain was banned
from state contracts in South Africa for a decade, thanks to its role
in a massive corruption scandal. And I'm not even saying
the consulting industry should be abolished. Getting outside feedback
on best practices can make a lot of sense
for an organization. We certainly need to preserve
a career path for high-achieving,
type-A bullshitters who don't want to commit
to law school and want to spend
their prime years flying business class
to Dallas. (AUDIENCE LAUGHS) Companies can feel free
to hire as many fresh-faced,
dork sociopaths as they want to take the heat for whatever
layoffs and/or atrocities they were already launching
in the first place. It's a free country, or not, depending on where
the McKinsey office is. (AUDIENCE LAUGHS) But if their work,
as they claim, really does impact the lives
of millions of people, they shouldn't get to be
invisible, and they should expect
much more accountability for their mistakes. And until such time
as that happens, the very least they can do
is be a bit more transparent with their recruiting videos
going forward. Hi there. Here are McKinsey, we're an elite group
of strategists, thinkers, analysts, innovators, guys named Brayden, and Delta Platinum Sky Miles
Reward Members, here to drive client success
in any business venture. We're proud to say
McKinsey alums include many of the most powerful people
on Earth. And also, Pete Buttigieg. We at McKinsey
genuinely believe great consultants can come
from anywhere. That's why our work force
features an incredibly diverse array
of graduates from all over the Ivy League. Even Cornell. So, if you're ambitious
college senior, or an MBA graduate who needs
to be told you're special or you will die, we'd like you to consider
a career at McKinsey. The best part
of my Harvard education was the look on people's faces
when I said, "I go to Harvard." I'm really passionate about belonging to groups
that impress people. And so, to be able
to continue that at McKinsey has been very fulfilling. One of the interview questions
I was asked in my final round was, "How much wood
would a woodchuck chuck if a woodchuck
could chuck wood?" Sounds like a silly question,
but it's actually a smart way to test
your approach to problems and how many billable hours
you can talk for. In my case, a lot. Here at McKinsey,
you'll have the opportunity to change the world by serving a surprisingly wide
array of clients. But not just anyone. For instance, we proudly
don't work for tobacco clients and haven't since the start
of this sentence. We've got clients that appeal
to every interest. Local interests,
foreign interests, and even conflicts
of interest. I worked for the FDA and
Purdue Pharma at the same time. I can't believe I was allowed
to do that. (CHUCKLES) My mom did say,
"Shouldn't that be illegal?" And that made me really worried,
until I remembered... she's not a consultant. Of course she wouldn't
understand. (CHUCKLES) I was basically talking
to an ape. (LAUGHS) We hold our employees
and our clients to a higher personal
and ethical standard. Core McKinsey values
will always be-- Sorry. You have a phone call. Not now. It's the Saudis. I actually do
have to take this. I think it might be about...
the thing. You've got Brayden D! But the point is,
you'll be using your big, special,
early-20s brain, unencumbered by
practical experience, to develop bespoke,
tailored solutions to address
company-specific needs. What we're recommending is finding
significant efficiencies by laying off the people
at the bottom of the company and paying more
to the people at the top. Hey! That's me! -Yes!
-With the money signs? -Yes, yes.
-That's you. It's me at the top! (LAUGHS) Look, we believe there are
three great institutions left in the world. The Marines,
the Catholic Church, and McKinsey. That's because the mark of
any good institution is matching outfits, evasion of responsibility
through institutional secrecy, and the misplaced belief
that you're saving the world. Because at the end of the day... we're McKinsey. We're McKinsey! We're McKinsey. We're McKinsey. And we're capable of anything. And culpable for nothing. (BOTH LAUGHING) I love that line. I mean, it's true. We can--
You know, they can't touch us. It's true. (AUDIENCE LAUGHS)