My early twenties played out like a demented mash-up of Wall Street and Caddyshack. After graduating from college as an English major, I had no idea what I wanted to do with my life. But somehow I finagled a job offer from McKinsey & Company, the consultancy famous for slapping dark suits onto cherubic Ivy Leaguers and injecting them straight into the bloodstream of corporate America.
That is how, in the summer of 1994, I found myself sitting across from the CEO of a $300 million clinical laboratory company, talking to him about the challenges that he and his company were facing as insurers put downward pressure on prices. I had no experience in the business world and didn’t know anything about medical diagnostics. But that didn’t matter. I was there with a legendary senior partner, Bob Attiyeh. That is who the client was paying for.
There are two common narratives about McKinsey. The first imagines the firm as some sort of hallowed place where future leaders go to test their mettle and learn the ways of the Force. Books like The McKinsey Way and The Lords of Strategy depict McKinsey consultants as heroes who rescue moribund businesses. The second narrative depicts McKinsey as a villain, driven primarily by greed. In their 2022 book When McKinsey Comes to Town, the journalists Walt Bogdanich and Michael Forsythe made the case that the firm is to blame for—or at least complicit in—all sorts of modern-day evils: skyrocketing CEO pay, the Great Recession, the opioid crisis, the killing of Jamal Khashoggi, China’s surveillance state, even the Houston Astros’ cheating scandal.
“McKinsey is a quintessential institution of the post-World War II era.”
The truth is that McKinsey is a quintessential institution of the post-World War II era. As such, the firm reflects all the successes of that era, as well as its blind spots, moral failings, and excesses. McKinsey was a key contributor to—and beneficiary of—the economic forces of globalization and financialization, trends that raised living standards around the world. But those same trends have been culturally destructive and politically destabilizing, which is why they are now often seen in a negative light by many on both the right and the left.
I was only at McKinsey for a couple of years, but that time played a critical role in my formation. I learned a bit about the Force—and caught glimpses of the Dark Side.
After that introductory meeting with the lab company CEO, I went back to McKinsey’s Los Angeles office and poked my head into the “library.” I asked for everything they had on the clinical laboratory business. I started “drinking from the firehose,” as they say. Somebody gave me a sample “deck” of slides, and I started churning out punchy little graphics with bullet points that attempted to depict the problems that this company was facing.
I’ll never forget the look on the junior partner’s face when I shared some of my work. He had brought some of his own draft slides to share with me, and he paused when I showed him mine. “Yours are better,” he said. And I realized then that I had passed some sort of test.
At our first big progress review, I stayed silent as the two partners presented three major strategic options to the CEO and the board. The next day, the CEO popped into our team room and said, “I’ve heard what your bosses have to say. But I want to hear what you guys think.” My direct superior on the project turned to me. “You go first, Tim,” he said.
I’m sure I just bumbled through a regurgitation of what the partners said the day before. But the CEO and his board were clearly thrilled at the quality of work we were doing, and they were actively imagining all the possibilities for their company. And I was playing a big part.
“Being an English major is pretty good preparation for a career in consulting.”
It turns out that being an English major is pretty good preparation for a career in consulting, for the board room is not so different from the seminar room. A bunch of people sit around a table trying to say insightful things that push the group in a particular direction. It’s both fun and gratifying—when it goes well. Over the first year I spent at “the Firm” (as McKinsey calls itself), it began to feel like I had been plucked from obscurity like some budding starlet at the drugstore. Now, I thought, I was on track to become a master of the universe.
McKinsey was founded one hundred years ago. Started by the accountant and professor James O. McKinsey in Chicago in 1926, the firm was really built by Marvin Bower, James McKinsey’s protégé, who served as managing director from 1950 to 1967. It was Bower’s ethic of superior client service—he modeled McKinsey on the great corporate law firms—that drove McKinsey’s ascent in the decades after World War II. Bower emphasized, from the very beginning, that McKinsey’s competitive advantage would be its high ethical standards and its commitment to “placing client welfare ahead of our own interest.”
In 1941, the political philosopher James Burnham prophesied that a new class of people would soon replace old-style capitalists as the primary locus of power in modern society. Burnham was no doubt unaware of McKinsey, which was still a minor concern fifteen years after its founding. But the firm’s history offers a confirmation of Burnham’s hypothesis. His book The Managerial Revolution heralded the rise of the managers—business executives, engineers, government bureaucrats, the leaders of NGOs. “What is occurring in this transition,” wrote Burnham, “is a drive for social dominance, for power and privilege, for the position of ruling class, by the social group or class of the managers.”
McKinsey played an important role in this transition. Consider its “compensation consulting” practice, which contributed to the dramatic escalation of executive pay in the 1960s through the 1980s. By the time I came on, McKinsey no longer did this kind of work. It had come to seem uncouth. But Burnham would argue that the pursuit of ever higher top-level compensation had been inevitable: The ascendant managers were simply extracting their fair share of economic returns (or more) at the expense of the owners of companies.
We often think of the private sector and the public sector as separate entities working in opposition to one another. For Burnham, this was an outmoded conception of how the economy worked, as the managerial class cut across both. In line with this assessment, McKinsey has done a great deal to blur the distinction between big business and big government.
About a decade ago, I was a part of a team of ex-McKinsey consultants doing work for one of the largest health insurance companies in the United States. A quick glance at the company’s annual report showed that about half of the company’s revenue came from the government, and—for many of their health insurance plans—the level of profits was dictated by the Affordable Care Act. In effect, the company had become something close to a public utility.
For the executives at a company like this, the primary levers for increasing profits are, first, lobbying Congress for under-the-radar tweaks to big programs like Medicare, Medicaid, or Obamacare, and second, putting pressure on government regulators to loosen their reimbursement policies. Serving customers becomes secondary.
“McKinsey often sits on both sides of the table.”
McKinsey often sits on both sides of the table. Not only does the firm serve the big health insurers and health care providers, but it serves the major regulatory agencies: the Food and Drug Administration (FDA), the Center for Medicare and Medicaid Services (CMS), the Department of Health & Human Services (HHS). The same is true in the defense industry, where McKinsey has served the Pentagon and the major branches of the armed forces, as well as most of their major contractors.
Today, McKinsey’s clients include not just large private-sector corporations, but federal agencies, state governments, public school districts, public university systems, etc. Burnham’s vision of a ruling managerial class that cuts across business and government has come to fruition. And McKinsey & Company is one of the primary institutions of that sector-less class.
During that first summer at McKinsey, I played in the annual company golf tournament at a course in the hills above Los Angeles. I was put into a foursome with that same junior partner who liked my work for the clinical laboratory company, someone I greatly admired. Going into the eighteenth hole, we were one shot out of first place. To the partner’s chagrin, all of us younger guys whacked our tee shots into the trees, and our chances of winning the Office Cup appeared to be dwindling. We drove our carts down to where my ball was, in the rough, and I pulled out a club to address the ball.
It was then that the partner broke in. “Just kick it out here,” he said, pointing to the middle of the fairway. I chuckled. That’s funny. “No really,” he said with more force. “You need to hit from out here. I don’t want to lose.” I traded awkward glances with the two other junior consultants sitting nearby in their golf cart. One of them shrugged his shoulders. Sheepishly, I followed his instructions, and then swung away. It was another kind of test, and this one I failed. We lost the tournament anyway.
As a young man, I remember thinking there were two parallel cultures within McKinsey. The first was the Marvin Bower faction that put client service above all else. Several of my early mentors told me that my job was to so fully transform the client that I would be “obsolete” in a matter of months, and the company could go forth, sans McKinsey, functioning at a much higher level. In this view, your job as a consultant was to wean the client off of consultants.
But there were also consultants at the firm whose bottom line seemed to be winning at all costs, even if that meant bending the rules (or kicking your ball out into the fairway). If your primary goal is profit, you’re going to be less eager to wean your clients off of consultants, for it doesn’t pay to be “obsolete.” In my years at McKinsey, the firm was moving to a model in which it cultivated “core clients,” who would employ dozens of McKinseyites for years on end, reaching into all corners of a client’s operations.
I’m not so naive as to believe that the early partners of McKinsey were free from greed, but I do think the selfless approach to client service gradually became less important than the drive to pull in more money. How else can you explain McKinsey’s extensive work for corrupt and authoritarian governments like those of Saudi Arabia, Russia, and China? But why didn’t the values-driven partners put up more of a fight?
I think the answer lies in the optimistic attitude that broke out at the end of the Cold War. The authors of When McKinsey Comes to Town quote former partner Olivier Kayser, one of the founders of the firm’s offices in China, which worked directly for entities owned by the authoritarian government. “There was a feeling that economic development would lead to democracy,” Kayser said. “The general direction of history was clear.” If you believe that you’re directly contributing to historical forces that are remaking the world for good, then you can convince yourself that it’s your duty to take on these types of clients. And it certainly doesn’t hurt that they have millions of dollars of ill-gotten gains that they want to share with you.
“Burnham foresaw all of this.”
Burnham foresaw all of this. The managers, he predicted, would have a type of power that would transcend national boundaries, and they would come to flourish in all types of political regimes, whether nominally capitalist, socialist, authoritarian, monarchic, or democratic.
The dominant ethos at McKinsey was not cynical and amoral. In fact, it was often utopian. This is the attitude on view in Market Unbound: Unleashing Global Capitalism, a 1996 book written by two McKinsey partners. Channeling the unmitigated optimism of the End of History, the authors, Lowell Bryan and Diana Farrell, told readers the world was going to “throw off all bonds” in order to create the “perfect market.” The result would be “an open, global system” in which the “unfettered, unrelenting search for profit” generates “great prosperity.”
Neither greed nor selfless devotion to client service is the engine of McKinsey’s dominance. You’ll find plenty of both in the corridors of McKinsey, but the real driver of the firm’s success is the desire for approval and recognition. The firm prides itself on hiring the “best and the brightest”—people who have been getting straight A’s and acing standardized tests since they were in high school. It’s worth considering how this elite class of overachievers—the pool from which McKinsey recruits are plucked—has changed over time. Decades ago, the majority of these young people would have been raised in at least nominally religious households. Their university curriculum would likely have retained some modest commitment to the highest ideals of Western Civilization. In addition, it’s likely that they would have worked in a number of different jobs before they graduated from college. I myself, before I started at McKinsey, had worked as a landscaper, painter, caddy, newspaper boy, classroom aide, and grocery store clerk.
I fear that the typical McKinsey recruit today has quite a different background. For one, he or she is unlikely to have much actual work experience before becoming a consultant, since overachieving teenagers have largely exited the workforce. And elite universities have seemingly become captive to a progressive ideology that sees high ideals as masks for more selfish motives. In theory, this outlook is critical of power, but in practice, it can become a justification for cynical acceptance of the status quo. If all higher ideals are mere pretexts for the pursuit of power and wealth, why even pretend to be guided by them?
During the same era that it was aiding oppressive authoritarian regimes and shameless opioid manufacturers, McKinsey was, at least on the surface, purporting to be more and more progressive. It now advertises a “Sustainability and Social Impact” practice, and its website features a statement about pro bono work that “helps advance Black communities globally.” Predictably, the firm’s current international head of Diversity and Inclusion has her pronouns displayed on her LinkedIn profile.
McKinsey faces serious political and economic headwinds. The current international wave of populism can be read as a revolt against the dominance of the managerial class, though it’s not yet clear whether that revolt has staying power. Meanwhile, it’s no longer clear that economic and political liberalism will win the day, as was once assumed. To regain the moral high ground, it’s likely that McKinsey would have to to show a willingness to turn down million-dollar fees when accepting them conflicts with the common good. But how will a firm like McKinsey define the common good without reference to utopian visions of an unconstrained global marketplace?
The firm’s claim on the best-and-brightest in the business world has been undermined by the rise of both Silicon Valley and the investor class of hedge funds and private equity. What is more, the AI revolution promises a future in which “intelligence is a utility,” as OpenAI’s Sam Altman recently put it—a metered tap we can turn on for access to the peerless insights of Claude or Grok. I can imagine a McKinsey consultant telling her client: Your competitive advantage is at risk of being commoditized. So the high priests of “best practices” are going to need to adapt. I’m sure they’re already adapting. But as intelligence becomes an artificial commodity, I suspect the importance of wisdom will become increasingly clear.