The video takes an investigative look into the operations and impact of McKinsey & Company, uncovering how this influential consulting firm works behind the scenes for over 450 of the Fortune 500 companies and various governments. Often assisting controversial sectors such as big soda, tobacco, oil, and pharmaceuticals, McKinsey is scrutinized for its roll in mass layoffs and aggressive market strategies.

The video delves into McKinsey's methods, tracing the firm's history and probing the controversies surrounding its work with significant clients like Purdue Pharma and Providence Hospital. From healthcare to executive compensation and standardizing practices across industries, McKinsey's techniques have often led to significant ramifications, including reduced employee benefits and increased health care costs.

Main takeaways from the video:

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Key Vocabularies and Common Phrases:

1. influential [ˌɪnfluˈɛnʃəl] - (adjective) - Having the power to cause changes or have an effect on people or things. - Synonyms: (powerful, commanding, authoritative)

I'm entering the global headquarters of one of the most influential companies in the world.

2. legitimizer [lɪˈdʒɪtəˌmaɪzər] - (noun) - A person or thing that makes something acceptable or valid. - Synonyms: (validating force, vindicator, justifier)

They've been called the single greatest legitimizer of mass layoffs of anyone, anywhere at any time in modern history.

3. turbocharge [ˈtɜːboʊˌtʃɑːrdʒ] - (verb) - To greatly increase the speed or energy of something. - Synonyms: (boost, accelerate, enhance)

McKinsey is now accused of helping drug makers to, quote unquote, turbo charge the sales of prescription opioids.

4. scandal [ˈskændl] - (noun) - An action or event regarded as morally or legally wrong and causing general public outrage. - Synonyms: (controversy, uproar, disgrace)

...a consulting company that had a client that may have been involved in fixing, or was apparently in a scandal.

5. standardize [ˈstændərˌdaɪz] - (verb) - To make something conform to a standard. - Synonyms: (systematize, regulate, homogenize)

...so they couldn't standardize practices as much.

6. compensation [ˌkɑːmpənˈseɪʃən] - (noun) - Something, typically money, awarded to someone as a recompense for loss, injury, or suffering. - Synonyms: (recompense, remuneration, restitution)

In 1951, General Motors hired McKinsey to conduct the first ever study of executive compensation.

7. accountability [əˌkaʊntəˈbɪlɪti] - (noun) - The fact or condition of being accountable; responsibility. - Synonyms: (responsibility, liability, answerability)

McKinsey escapes accountability in a way because they are behind the scenes.

8. symbiotic [ˌsɪmbaɪˈɒtɪk] - (adjective) - Involving interaction between two different organisms living in close physical association, typically to the advantage of both. - Synonyms: (mutualistic, interdependent, cooperative)

There's this symbiotic relationship between McKinsey and their clients.

9. dependency [dɪˈpɛndənsi] - (noun) - A dependent or subordinate thing, especially a country or province controlled by another. - Synonyms: (reliance, dependence, suppliancy)

Ultimately, we need to untangle the dependency on consulting McKinsey has fostered in our government.

10. philosophical [ˌfɪləˈsɒfɪkəl] - (adjective) - Relating or devoted to the study of the fundamental nature of knowledge, reality, and existence. - Synonyms: (theoretical, abstract, epistemological)

...creating workplaces that are more appealing as well as like just a philosophical change.

Behind Closed Doors The McKinsey Effect Reshaping the World

I'm entering the global headquarters of one of the most influential companies in the world. But you probably wouldn't know that because hiding in plain sight is kind of their thing. And from the shadows, they've been doing the dirty work for basically every brand you've ever heard of. Like 450 of the Fortune 500 companies. I'm talking big soda, big tobacco, big oil, and the very worst of big pharma. They've been called the single greatest legitimizer of mass layoffs of anyone, anywhere at any time in modern history. They also work for the Saudi, Chinese and American governments and on whatever the hell this is. The Line will be home to 9 million residents and organized in three dimensions. So who are they?

McKinsey is now accused of helping drug makers to, quote unquote, turbo charge the sales of prescription opioids. Behind President Vladimir Putin's war machine against Ukraine sits Rostec, until recently, a client of McKinsey and Company. You worked for a company that was fixing bread prices. No, I worked for a consulting company that had a client that may have been involved in fixing, or was apparently in a scandal. Today we're talking about McKinsey, the shadowy and parasitic consulting firm at the heart of nearly every industry in America. McKinsey claims to operate on a "no policy policy" free from a driving ideology or bias. But we tracked their history and broke down their worldview, and it places the consulting industry as secret agents in the war on working people.

So what do consultants even do? Okay, but what do they actually do? When I first applied and received an offer, I really had no idea what a BA does. The amazing thing is that what we do varies. Communicate, present, model, plan, problem solve. Be ambitious and find ways we can double our current rate of innovation. No, but what do they actually actually do? I had to ask some experts to get a straight answer.

Well, in an ideal world, consultants add their brainpower to any company. That was Mike Forsythe, a New York Times journalist and author of "When McKinsey Comes to Town." They come in as outsiders, look at a problem in a new way and give good advice. Consultants claim to help organizations solve problems that they would not be able to solve themselves. This is Garrison Lovely, a former McKinsey employee turned whistleblower and journalist. Whether that's entering a new market, reducing costs, helping government achieve its mission better. That's the idealized version. In the non idealized version, the advice they give is bad advice, or the client they're working with is not a good actor.

So where did this lucrative problem solving industry even come from? McKinsey was founded right after a period of historic corporate mergers. From 1895 to 1904, 1800 companies were crunched into just 157 megacorporations, including some familiar ones like U.S. Steel, Nabisco, General Electric and AT&T. You might also remember what happened in 1929. So in 1933, the government passed the Glass-Steagall Act, which stopped banks from speculation, which is basically gambling with the money regular people put in their bank accounts. But, it was basically preventing businesses from sharing information with each other about what they were doing and so they couldn't standardize practices as much. Consultants were a way to get around this where they would work for one company and figure out what they're doing and do this for a bunch of different companies within the same industry and help these companies behave in more or less the same way and standardize.

In 1951, General Motors hired McKinsey to conduct the first ever study of executive compensation. The project was led by this guy, Arch Patton. He noticed that laborers after World War Two, their wages were rising faster than management and went to companies and said, "Hey, did you know that your workers are actually getting raises more than you are and they were shocked by this." And this pioneered the field of executive compensation consulting. At the time of the study. The average CEO was paid about 20 times his typical worker's salary. Now average is hit between 2 and 300, with some outliers approaching 2000. Thanks, McKinsey!

They're management consultants. since they were founded in the 1920s. They've been working with management. There is no equivalent of McKinsey for labor. When it comes to labor, they've got one M.O –– layoffs. If they're not laying people off, they're making other cuts and recommendations that totally hurt workers and consumers.

A very common thing is a CEO wants to enter a new market or lay off a bunch of people or close down some division. McKinsey will do a bunch of analysis and they'll come up with all these clever seeming reasons why it makes sense to do the thing. And this is a way for the CEO or whoever else hired McKinsey to justify the decision. In 2005, the average annual salary for a Walmart associate was roughly $17,500. Its employee costs were going up because associates, as Walmart calls them, were staying longer and longer and longer, but they didn't see a really big boost in productivity. So McKinsey came on board to help reduce health care expenses and to also try to trim benefits. And one of the findings and recommendations was to hire more part-time workers because they don't have that burden of having all those benefits.

McKinsey also recommended that Walmart consider reducing its overall investment in profit sharing and 401k programs, lower its company-paid life insurance coverage, and move employees to consumer-driven health plans. Walmart wasn't the only client that used McKinsey to try and save money. In the 1990s, McKinsey came on board with Disneyland, and one of the areas they looked at was overhauling the maintenance program. And mind you, you have to keep in mind this is a place that had a spotless record. At that time, Disneyland had lots of mechanics maintaining rides. They made the rounds all day, tightening screws and bolts as needed, and checking key safety features like lap bars.

So the idea again, cut maintenance costs, move the maintenance crew to mostly work the graveyard shift at night. The ride mechanics sent Disney multiple warnings and safety concerns. McKinsey asked him why lap bars on a roller coaster were inspected daily when records showed they never failed. He replied "The reason they don't fail is because we check them every night. It's like a pilot saying, 'Hey, we haven't crashed in a while. Let's just skip the preflight.' " Disney never responded to his complaints and he was later fired. Not long after this, a child was seriously injured after falling out of a ride because of a lap bar issue. He never walked or talked again and died a few years later.

Another serious accident occurred when an untrained supervisor docked a riverboat. It's just extremely dangerous. You need to have very well-trained people to do this. Apparently the wood in the dock was rotted and the whole cleat just shot out like shrapnel and wound up killing one person and injuring somebody else. And another person was killed when wheels failed on the Thunder Mountain Roller coaster. The cited causes of all of these accidents were staffing and maintenance. This is not the Disney that many people grew up with, and they all happened after McKinsey came on board.

But did McKinsey face any consequences for their bad advice? McKinsey escapes accountability in a way because they are behind the scenes. It's all about secrecy with them. Our advice is to you, and it's confidential. If you guys do great, wonderful. You take all the credit. If you screw up and things go bad, it's on you. It's not us. If the project fails, and your decision ends up being bad, it's like, well, clearly you hired the best consulting firm, so it must have been something else. There's this symbiotic relationship between McKinsey and their clients. When something goes wrong, all McKinsey did was make recommendations, and all the client did was follow them. It's a way to cover your ass, which is a very common expression in the business world.

This system is great for short-term profits and shareholders, but not so great if you care about jobs or safety. So what happens when you apply this mindset to the industries that we literally can’t live without? That's when things start to get even darker. Health care is pretty much McKinsey's bread and butter. Bread prices. Hospitals, for sure. Insurance companies. Managed care companies. Pharmaceutical companies. Top five McKinsey clients would be companies like Johnson and Johnson and the big managed care insurance company, Anthem. Aetna, Blue Cross Blue Shield. Let me say that again. McKinsey's biggest money earner is our health care system, and it's also where they've done some of the most damage.

In 2018, McKinsey was contracted with the non-profit hospital Providence Medical to design a program to get more patients to pay their medical bills. Providence Hospital is a tax exempt hospital. They're required to provide free care to poor people, and they were looking for any way to cut costs. And they turned to McKinsey to find a way to convince poor people to pay bills, even if in many cases they actually were not required to pay those bills. McKinsey literally wrote a script for hospitals staff to read to these patients. Staff were not allowed to take no for an answer and were told to take just $3 if that was all the patient had. If they didn't pay, if they didn't get anything out of this, in some cases they would refer to a third party debt collection agency. It would destroy these people's credit rating. And now Providence is being sued while McKinsey is once again not being held accountable legally, financially or otherwise.

And while they're working for private sector clients, they're also working for the government agencies that are meant to be regulating them. Two more McKinsey clients were Philip Morris and Juul. McKinsey was also working for the FDA office that regulated tobacco. at the same time they had these clients. And you see the reporting in our book that said that actually the people the FDA did not know that McKinsey was advising the tobacco companies. And this is the same with Juul. This is when the FDA was cracking down on these these e-cigarettes and pharma, the same thing. And most infamously, they're working for opioid makers, especially Purdue Pharma.

Conflicts of interest are the name of the game for McKinsey. They're like business class mercenaries. They'll fight for any and every side that will pay them, and sometimes even ones that don't. In 1997, the state of Illinois was trying to reduce welfare spending. They needed help, and McKinsey generously offered their services for free. One of the tricks McKinsey does, they will often come in and do pro bono work. And this is often a way just to kind of get in the door. Once their foot was in the door, they were called back by some of the same state officials 20 years later to help, this time with restructuring Medicaid. And this time, it wouldn't be for free.

Around the same time, Illinois had some budget troubles. It was found that they were in about $1,000,000 of debt to basic medical services, while sending 75 million to McKinsey. It was also found that under McKinsey's project, the state was paying $63 billion to seven private insurers, four of whom were also McKinsey clients. According to the Illinois Comptroller. this taxpayer money was spent with less oversight than a purchase of clips. Like a vampire, McKinsey got themselves invited in with pro bono work, and now they were sucking Illinois dry. They're on all sides of the food chain in the health care industry, and there's just so much money there.

On their own website right now, McKinsey admits that health care in Illinois should be improved specifically around opioid use. So cool that the solution to these problems they have actively helped create is bold, collaborative action. It's like if someone came over to your house and used all your dishes and then was like, according to my research, someone should probably do the dishes. This is a done man. Once they sink their teeth into our governments, they stay for as long as they can. They make sure these agencies don't even remember a time before them. You just end up relying on these people who are getting paid multiple times what a civil servant will be paid and aren't really accountable to the public in a serious way. And may just come through for a few months at a time and then move on to something else. And so you don't build up this expertise and you just don't have like this capacity to to do things that states need to do.

They do all this while hiding behind the fact that they don't make the decisions. This guy, Richard Elder, was like, Look, we don't do policy. We just do execution. We're not here to make choices about what policies are good. All the values we're about doing right by our clients, having an obligation to dissent. But that doesn't mean the dissent is going to go anywhere. But that doesn't mean the dissent is going to go anywhere. Just means you're not going to get fired for speaking out. A former McKinsey employee told Michael that a manager would advise new recruits to wedge yourself in and spread like an amoeba. Once in you should spread yourself in the organization and do everything.

In other words, act like “a Trojan horse.” He was talking about their clients, but as we've seen, the McKinsey amoeba has wedged its way into every part of American life. So what should we do about it? Well, the DOJ is investigating their work on opioids criminally for the first time, and some politicians have even talked about banning McKinsey from federal contracts. But most of these problems aren't even unique to McKinsey. If we just banned one consulting firm from federal contracts, the others would likely just fill in the gaps. The reality is there's a company called Bain and Boston Consulting Group and Deloitte at Accenture, and they are offering kind of the same product. and they are offering kind of the same product. And I don't think that the results would be that different.

Ultimately, we need to untangle the dependency on consulting McKinsey has fostered in our government. Things are set up in such a way where if you just like, cut off the consulting firms, I don't think you can build up that capacity overnight. Like this is like a kind of a generation-long project, and I think that requires, yeah, governments like paying people more and creating workplaces that are more appealing as well as like just a philosophical change. Public-private partnerships are not the default best way to go and government should actually learn how to do things well again. And we've done it before. And we've done it before.

And what about the army of young MBA grads ready to keep the consulting industry marching on for another 100 years? I would tell them that, you know, these organizations will promise you that you can do work that is exciting and prestigious and improves the world with smart people, that pays well. You can have it all. And I would just tell them that that's not true. I think I'm really much happier than the cohort of people that I worked with at McKinsey. Even though I make, like, so much less money than them. And my life and career is like, less stable and predictable. But you have privilege by being in this position and you have some kind of opportunity, and I think to some extent an obligation to use that to actually make the world a better place. And I think you will end up being happier for it.

Business, Leadership, Technology, McKinsey & Company, Consulting Industry, Corporate Accountability