WEBVTT - McKinsey: Something to hide? 0:00:00.080 --> 0:00:02.320 Hey, folks, I want to take a minute to ask 0:00:02.360 --> 0:00:05.600 for your help. This show is a labor of love 0:00:05.680 --> 0:00:08.560 for all of us here on the team at calling BS. 0:00:08.800 --> 0:00:13.560 We debate which organizations to investigate. We carefully consider how 0:00:13.560 --> 0:00:16.479 to best tell these stories. Our goal is to create 0:00:16.480 --> 0:00:19.759 a show that exposes purpose washing and the real harm 0:00:19.800 --> 0:00:22.400 it does in the world. But we also want to 0:00:22.400 --> 0:00:24.800 create a show that's fun to listen to and serves 0:00:24.800 --> 0:00:28.520 as a practical guide for entrepreneurs and leadership teams about 0:00:28.520 --> 0:00:32.199 how to do purpose right. We're really proud of what 0:00:32.240 --> 0:00:35.680 we've made so far, and we're super excited about getting 0:00:35.720 --> 0:00:37.839 season three into production so we can share it with 0:00:37.880 --> 0:00:41.560 all of you now to the help we need. So far, 0:00:41.720 --> 0:00:46.720 we are self funded. We need a sponsor or sponsors 0:00:46.760 --> 0:00:49.800 to help us with the cost of production. But, and 0:00:49.880 --> 0:00:53.200 this is important, we feel like it would be disingenuous 0:00:53.240 --> 0:00:55.800 given the theme of the show to accept money from 0:00:55.840 --> 0:00:58.920 just anybody. It's important to us that the sponsors of 0:00:58.920 --> 0:01:02.920 this show shared of shows values. We're looking for partners 0:01:02.960 --> 0:01:07.080 who are purpose lead themselves, Companies or organizations that truly 0:01:07.120 --> 0:01:10.640 walk their talk. Companies who understand the harm that purpose 0:01:10.680 --> 0:01:13.840 washing does and who understand how important it is for 0:01:13.920 --> 0:01:17.520 all of us that more companies embrace the path to purpose. 0:01:18.920 --> 0:01:21.319 If you're a part of an organization like that, or 0:01:21.400 --> 0:01:23.959 you know one that seems like a good fit, don't 0:01:23.959 --> 0:01:26.480 hesitate to drop us a line. You can reach me 0:01:26.520 --> 0:01:30.880 directly at Team Montague at Calling Bullshit podcast dot com. 0:01:30.920 --> 0:01:33.080 Thanks for listening, and let's get on with the show. 0:01:46.040 --> 0:01:56.680 McKenzie the enigmatic global consulting firm. Their influence unrivaled, their 0:01:56.720 --> 0:02:11.040 talent extraordinary, their allure irresistible, their bullshit undetected until now. 0:02:14.840 --> 0:02:19.680 Welcome to Calling Bullshit, the podcast about purpose washing, the 0:02:19.760 --> 0:02:23.240 gap between what an organization says they stand for and 0:02:23.320 --> 0:02:25.920 what they actually do and what they would need to 0:02:26.000 --> 0:02:29.360 change to practice what they preach. I'm your host, Time 0:02:29.400 --> 0:02:32.800 Montog You and I've spent over a decade helping organizations 0:02:32.840 --> 0:02:36.280 define what they stand for, their purpose and then help 0:02:36.360 --> 0:02:41.800 them to use that purpose to drive transformation throughout their business. Unfortunately, 0:02:42.240 --> 0:02:45.120 at a lot of institutions today, there's still a pretty 0:02:45.160 --> 0:02:50.760 wide gap between word and deed. That gap has a name, bullshit. But, 0:02:51.280 --> 0:02:54.000 and this is important, we believe that bullshit is a 0:02:54.000 --> 0:02:58.680 treatable condition. So when our bullshit detector lights up. We're 0:02:58.720 --> 0:03:03.000 going to explore rethink the organization should do to fix it. 0:03:14.320 --> 0:03:17.480 The campaign that Purdue launched when it put oxy content 0:03:17.480 --> 0:03:21.040 on the market was designed to make doctors I think 0:03:21.360 --> 0:03:25.480 that hoping it's rarely cause addiction. Now dozens of states 0:03:25.480 --> 0:03:28.840 and cities to filed lawsuits accusing Purdue of helping fuel 0:03:28.880 --> 0:03:32.560 the current health crisis with misleading marketing. I can't remember 0:03:32.680 --> 0:03:35.160 last time the FDA was a friend or or the 0:03:35.320 --> 0:03:38.360 spark for a rally for some of the tobacco stocks, 0:03:38.360 --> 0:03:41.720 But that's what we saw yesterday and Run ultimately filed 0:03:41.720 --> 0:03:45.800 for bankruptcy. Approximately twenty jobs and two billion dollars in 0:03:45.880 --> 0:03:50.120 employee retirement funds were lost. Many executives were brought to justice, 0:03:50.360 --> 0:03:53.920 and some of them ultimately ended up receiving prison sentences. 0:03:54.600 --> 0:03:59.360 Many Americans are struggling and barely getting by, but not everyone. 0:04:00.040 --> 0:04:04.600 Into the Economic Policy Institute, American CEOs were paid three 0:04:04.720 --> 0:04:08.520 hundred and fifty one times as much as a typical worker. 0:04:08.640 --> 0:04:12.240 The Department of Homeland Security has redirected hundreds of millions 0:04:12.240 --> 0:04:16.000 of dollars to immigration enforcement, growing the size and scope 0:04:16.000 --> 0:04:18.640 of ICE. The government has pulled money that was supposed 0:04:18.720 --> 0:04:20.800 to be spent on the Coast Guard, on t s 0:04:20.880 --> 0:04:24.400 A aviation security, and on FEMA hurricane relief. The U 0:04:24.520 --> 0:04:29.160 S Intelligence report has concluded that Saudi Crown Prince Mohammed 0:04:29.160 --> 0:04:33.000 bin Salmon personally approved the murder of the exiled journalist 0:04:33.040 --> 0:04:41.640 Jamaica and Ron, the Immigration and Customs Enforcement Agency a 0:04:41.839 --> 0:04:47.719 k a ICE, Big Tobacco, the f d A, Perdue Pharma, 0:04:48.440 --> 0:04:53.440 Big oil, and the Saudi Arabian government. What's the thread 0:04:53.480 --> 0:04:57.720 that connects all of these controversial organizations, governments and industries. 0:04:58.640 --> 0:05:05.040 They have all been clients of Mackenzie. Coincidence, bad luck, 0:05:05.800 --> 0:05:09.279 or is there something about Mackenzie that draws them into 0:05:09.279 --> 0:05:15.440 these dark corners of capitalism? The story of McKenzie and 0:05:15.520 --> 0:05:20.120 the story of global capitalism are inextricably linked. The firm 0:05:20.200 --> 0:05:24.280 consults with heads of state, boards of directors, and CEOs 0:05:24.480 --> 0:05:28.760 of most, if not all, of the most powerful corporations 0:05:28.760 --> 0:05:32.719 and countries on the planet. You'd be forgiven for not 0:05:32.839 --> 0:05:37.880 knowing much about Mackenzie. Secrecy is a precious organizational currency. 0:05:38.400 --> 0:05:41.200 Few people outside the firm have a clear idea of 0:05:41.240 --> 0:05:45.200 the full scope of their activities. Few people inside the 0:05:45.240 --> 0:05:49.680 firm know the full scope either. What is common knowledge 0:05:50.080 --> 0:05:53.640 is that for the past hundred years, McKenzie recruits elite 0:05:53.640 --> 0:05:59.400 talent from only the top tier universities. Mackenzie also sells 0:05:59.440 --> 0:06:02.680 these recruits. It's on the idea of wealth without guilt. 0:06:03.720 --> 0:06:07.560 To the young, gifted, and ambitious, a job at McKenzie 0:06:07.680 --> 0:06:12.520 is the ultimate initiation into success, with alumni currently holding 0:06:12.600 --> 0:06:16.760 high positions in government, as well as running companies like Google, 0:06:17.200 --> 0:06:22.479 Morgan Stanley, JP, Morgan Chase, IBM, Disney, and Boeing, to 0:06:22.600 --> 0:06:28.799 name just a few. They claim to be a values 0:06:28.880 --> 0:06:35.320 driven firm. Values like practicing high ethical standards, having an 0:06:35.320 --> 0:06:41.919 obligation to dissent, maintaining an independent perspective, and above all, 0:06:42.200 --> 0:06:46.880 serving the client first. If you were to visit their website, 0:06:47.080 --> 0:06:50.839 you'd see they claim to be a purpose led company. 0:06:51.120 --> 0:06:55.160 Their purpose to create positive, lasting change in the world, 0:06:56.080 --> 0:06:58.960 although that purpose is a little vague. As you listen 0:06:59.000 --> 0:07:02.159 to this story on old you'll begin to realize as 0:07:02.200 --> 0:07:05.400 I did, that because of their power to accelerate the 0:07:05.400 --> 0:07:09.479 adoption of new ideas across their client base, there is 0:07:09.680 --> 0:07:13.840 no company better positioned to create positive, lasting change to 0:07:13.920 --> 0:07:20.480 the system of capitalism than McKenzie. So do their deeds 0:07:20.520 --> 0:07:24.080 back up their words. Does their value of serving the 0:07:24.160 --> 0:07:28.960 client first mean that every other value comes second? Can 0:07:29.000 --> 0:07:31.960 we trust any company to be purpose led when they 0:07:32.040 --> 0:07:37.760 operate in almost total secrecy? Flip on your BS detectors, folks, 0:07:37.760 --> 0:07:40.280 and join me as I talk with three people who 0:07:40.360 --> 0:07:43.640 are deeply qualified to help us discover the truth behind 0:07:43.760 --> 0:07:47.960 these questions and more. A New York Times investigative journalist 0:07:48.000 --> 0:07:50.880 and co author of the new book When McKinsey Comes 0:07:50.920 --> 0:07:55.760 to Town, followed by two former McKinsey consultants who have 0:07:55.880 --> 0:08:05.120 worked inside the belly of the beast. Folks, I am 0:08:05.240 --> 0:08:09.200 very excited to welcome New York Times journalist and author 0:08:09.440 --> 0:08:13.440 Mike Forsyth. Mike, thank you for being here today, and 0:08:13.560 --> 0:08:17.720 welcome to calling bullshit. I'm so happy to be here. Ti. So, 0:08:17.840 --> 0:08:20.360 you and your co author, Wolf Buck Danich have written 0:08:20.360 --> 0:08:26.360 a fascinating book about Mackenzie, which I found both fascinating 0:08:26.360 --> 0:08:29.800 and honestly a little bit scary. What what moved you 0:08:29.880 --> 0:08:33.000 to write about this topic? So all credit goes to 0:08:33.320 --> 0:08:36.640 uh my co author Wald Buck dani He started looking 0:08:36.679 --> 0:08:43.079 at Mackenzie back in because he saw that Mackenzie's work 0:08:43.520 --> 0:08:46.800 was contributing to inequality and was it was such a 0:08:46.840 --> 0:08:50.320 powerful secretive firm. So he was pitching two editors back then, 0:08:50.679 --> 0:08:53.280 let's write about this firm. Our first bite of the 0:08:53.320 --> 0:08:59.240 apple in was about mackenzie's work in South Africa. But 0:08:59.360 --> 0:09:01.480 in that story we also mentioned a little bit about 0:09:01.520 --> 0:09:05.200 McKenzie's work with ice. That led to, you know, another 0:09:05.280 --> 0:09:08.040 chain of events, and we just kept writing and writing, 0:09:08.080 --> 0:09:12.880 and we just kept writing. How would you describe what 0:09:12.960 --> 0:09:17.559 McKenzie does. So they're a management consulting company, so more 0:09:17.600 --> 0:09:20.800 than thirty thousand people started in the US, but actually 0:09:20.840 --> 0:09:23.440 most of their employees are outside of the US. Now, 0:09:23.760 --> 0:09:26.839 when you say a management consulting company, they work for 0:09:26.880 --> 0:09:31.680 the C suite, the CEO, CFOs, CEOs, and a lot 0:09:31.679 --> 0:09:35.040 of the time their work is garden variety cost cutting recommendations. 0:09:35.080 --> 0:09:37.440 That's what they're known for, probably the best. You know, 0:09:37.440 --> 0:09:39.760 they're the people you fear when they come in and 0:09:39.800 --> 0:09:42.840 they figure out where jobs need to be cut, you know. 0:09:43.080 --> 0:09:46.520 So there's the efficiency experts, the efficiency experts, and they 0:09:46.559 --> 0:09:48.640 have been for they've been around for nearly a hundred 0:09:48.720 --> 0:09:51.480 years and they've always been the efficiency experts. But they 0:09:51.559 --> 0:09:54.280 do a lot more than that, uh, you know, they 0:09:54.320 --> 0:09:58.920 they help with refocusing companies focusing on new lines of business. 0:09:58.960 --> 0:10:03.600 They help governments reorganized departments such as the FDA for example. 0:10:04.080 --> 0:10:07.199 Uh And they also, I think, and this is really important. 0:10:07.840 --> 0:10:10.920 Over the decades, and especially since the nineteen eighties, they 0:10:10.920 --> 0:10:15.079 have been big propagators of ideas around the world, diffusers 0:10:15.160 --> 0:10:20.000 of knowledge, so they are very powerful propagators of information. Yeah, 0:10:20.000 --> 0:10:24.880 they're almost like the global nervous system for the business community, 0:10:25.000 --> 0:10:28.839 right like they are the behind the scenes transmitter of 0:10:28.920 --> 0:10:34.679 vital information. McKenzie is an almost mythic brand in consulting. 0:10:34.760 --> 0:10:39.880 They have a reputation for being incredibly smart, extremely effective, 0:10:40.320 --> 0:10:45.640 and intensely secretive. My first question here really is how 0:10:45.679 --> 0:10:48.640 did you get the access that you needed to even 0:10:48.679 --> 0:10:51.960 tell this story. There's a lot of ways we did it. 0:10:52.280 --> 0:10:56.240 One thing that surprised us early on was people coming 0:10:56.320 --> 0:11:00.000 to us working at McKinsey or had just left McKinsey 0:11:00.160 --> 0:11:03.360 to tell their stories. And it took a while, but 0:11:03.400 --> 0:11:07.720 we realized why because mackenzie is such a different company 0:11:07.760 --> 0:11:11.480 from like say Goldman Sachs or some private equity company, 0:11:11.559 --> 0:11:14.600 where you know, there's no pretense when you work there, 0:11:14.320 --> 0:11:17.320 You're there to earn money, you're there to be part 0:11:17.360 --> 0:11:20.920 of unfettered capitalism if you're at Goldman Sachs, right. But 0:11:21.240 --> 0:11:26.000 at Mackenzie, they lure very idealistic, very intelligent people into 0:11:26.040 --> 0:11:29.840 the company. Their recruiting pitch is all about making a difference, 0:11:30.200 --> 0:11:34.160 and they talk inevitably in their recruiting pitches talking about 0:11:34.360 --> 0:11:36.120 things you could do to make the world better, you know, 0:11:36.160 --> 0:11:39.240 with climate or you know, with health, things like that. 0:11:39.559 --> 0:11:44.440 And it's because of that that people when they got there, 0:11:44.440 --> 0:11:47.160 realized they've been sold a bill of goods, and they 0:11:47.200 --> 0:11:49.320 came to us, and some of them came with some 0:11:49.440 --> 0:11:53.600 extraordinary information. And this didn't surprise me, to be honest, 0:11:54.240 --> 0:11:59.520 because Mackenzie does use that technique of trying to trying 0:11:59.520 --> 0:12:02.720 to rude people who really want to make a positive 0:12:02.760 --> 0:12:04.640 impact on the world, and they recruit from some of 0:12:04.679 --> 0:12:08.280 the best schools around the world. A large group of 0:12:08.280 --> 0:12:12.000 people both inside the company today and also people who 0:12:12.000 --> 0:12:15.000 have left the company who feel some loyalty to it, 0:12:15.080 --> 0:12:17.160 right they joined it for the right reason. They want 0:12:17.200 --> 0:12:19.120 to kind of protect it. You know. The impression I 0:12:19.120 --> 0:12:21.760 get from your book is many of them hate seeing 0:12:22.000 --> 0:12:27.120 when the company gets involved in unsavory things or things 0:12:27.200 --> 0:12:29.199 that are, you know, they know are going to damage 0:12:29.240 --> 0:12:31.480 the brand. It almost feels like they come to McKenzie's 0:12:31.520 --> 0:12:35.920 defense sometimes some people. The more senior the people are, 0:12:36.000 --> 0:12:39.160 the more they come to mckensey's defense, it seems. Uh. 0:12:39.200 --> 0:12:41.840 And it's the younger people that you know, haven't spent 0:12:41.920 --> 0:12:44.080 their whole lives there are that the prime of their 0:12:44.120 --> 0:12:47.360 lives there who can move on and do other things 0:12:47.400 --> 0:12:50.440 that are more likely to come to us. So it's true. 0:12:50.480 --> 0:12:53.120 I think the majority of the whistleblowers we had are 0:12:53.120 --> 0:12:57.440 the really good sources we had were on the younger side. Yeah, 0:12:57.520 --> 0:12:59.240 And it was over and over again in the book 0:12:59.240 --> 0:13:01.760 that the young can Sultan's kind of rose up when 0:13:01.800 --> 0:13:05.400 there was, you know, malfeasance of of one kind or another. 0:13:06.160 --> 0:13:09.080 It's it's good to see that there are internal checks 0:13:09.080 --> 0:13:12.400 and balances as well. So you touched on this, but 0:13:12.440 --> 0:13:14.680 I want to dig a little bit deeper. The company 0:13:14.720 --> 0:13:18.880 also claims to be purpose let itself and they say 0:13:18.920 --> 0:13:22.880 their purpose is to create positive, enduring change in the world. 0:13:23.440 --> 0:13:25.760 And so right out of the gate, what do you 0:13:25.840 --> 0:13:29.760 think about that purpose? Having written that this book, I 0:13:29.800 --> 0:13:33.680 think it's a very noble purpose. Agree, The whole point 0:13:33.720 --> 0:13:36.440 of the book is that they don't live up to 0:13:36.480 --> 0:13:39.600 that purpose in many important ways, and some of the 0:13:39.640 --> 0:13:42.760 work that they do does real harm to the world. 0:13:42.920 --> 0:13:46.280 But you know, they also have values, and that's the 0:13:46.360 --> 0:13:49.040 crux of the problem is that their number one value, 0:13:49.480 --> 0:13:52.280 you know, over the decades, has been to serve the 0:13:52.400 --> 0:13:57.600 client first. So, um, let's get into some of the 0:13:57.720 --> 0:14:01.520 things that really opened my eyes in this book. One 0:14:01.520 --> 0:14:04.439 of the many unexpected things that I got from it 0:14:04.640 --> 0:14:10.240 is mackenzie's role in a number of aspects of let's 0:14:10.280 --> 0:14:14.960 call it lead stage capitalism. So, for instance, income inequality. 0:14:15.160 --> 0:14:19.200 I never thought about McKenzie when it came to that topic. 0:14:19.680 --> 0:14:22.880 Can you talk about how the firm had a role 0:14:23.160 --> 0:14:26.240 in the you know now vast and growing divide between 0:14:26.280 --> 0:14:30.640 workers and managers. There are so many ways that mckensey's 0:14:30.640 --> 0:14:32.320 had a big role in this. But it started in 0:14:32.480 --> 0:14:36.080 nineteen fifty and McKinsey had been hired by General Motors 0:14:36.120 --> 0:14:39.840 to do a study about a compensation for its executives 0:14:39.880 --> 0:14:43.680 and and mckensey looked at compensation at many companies and 0:14:43.800 --> 0:14:46.480 it was this hot shot partner, young guy named Arch 0:14:46.600 --> 0:14:52.040 Patton back in nineteen and he made an amazing discovery. 0:14:52.440 --> 0:14:56.960 He discovered that workers pay was catching up to executive pay, 0:14:57.000 --> 0:14:59.840 or was growing faster than executive pay. So the game 0:15:00.400 --> 0:15:04.320 between executives and workers was narrowing. Well wasn't big enough. 0:15:04.480 --> 0:15:07.720 And you know, and this was a time when labor 0:15:07.800 --> 0:15:10.280 unions were strong. There had been you know, something called 0:15:10.280 --> 0:15:12.720 the Treaty of Detroit, where you know, workers got all 0:15:12.760 --> 0:15:15.120 sorts of benefits, you know, so that they wouldn't strike. 0:15:15.760 --> 0:15:20.000 So this got spread around from company to company, and 0:15:20.680 --> 0:15:23.560 some companies executives didn't like the fact that they were 0:15:23.640 --> 0:15:26.600 ranked lower than other ones, and it started this race 0:15:26.640 --> 0:15:29.600 to the top where the companies would raise pay for 0:15:29.640 --> 0:15:33.160 their executives based on these McKenzie studies. That happened year 0:15:33.240 --> 0:15:35.680 after year after year, and this guy arch Patton would 0:15:35.680 --> 0:15:38.800 publish these unfortunate he published these in the Harvard Business Review. 0:15:39.160 --> 0:15:42.720 So company executives started knowing what people in other industries 0:15:42.720 --> 0:15:46.480 were making. They didn't want to be behind. Stock options 0:15:46.480 --> 0:15:51.240 started becoming in vogue. Mckensey did these compensation studies, you know, 0:15:51.320 --> 0:15:53.920 for for individual companies and became a very big part 0:15:54.480 --> 0:15:57.240 of the firm's work. And this guy alone was billion 0:15:57.240 --> 0:16:01.920 about ten of all revenue at mckinn z at the time. Yeah, 0:16:02.000 --> 0:16:04.520 so he built a huge practice and you could you 0:16:04.600 --> 0:16:06.640 kind of go, let's see, let's who are you going 0:16:06.680 --> 0:16:08.560 to call if you want to get a get a 0:16:08.640 --> 0:16:13.320 raise and you're a CEO, call call our chip McKenzie, 0:16:13.520 --> 0:16:19.320 right right. Yeah. Simultaneously though, McKenzie is as the efficiency 0:16:19.440 --> 0:16:23.240 expert showing some of those same companies how to cut 0:16:23.320 --> 0:16:28.840 costs by downsizing and then ultimately offshoring talent to other 0:16:28.960 --> 0:16:33.600 countries to drive compensation of workers lower. That's right. So 0:16:33.800 --> 0:16:37.840 offshoring was all the vogue at McKinsey in the nineties. 0:16:37.960 --> 0:16:41.480 There were mckensey partners writing books about the benefits of 0:16:41.480 --> 0:16:45.760 off shoring globalization. You know, McKenzie would just talk about 0:16:45.800 --> 0:16:49.200 this with endless companies and they would put slides in 0:16:49.400 --> 0:16:52.680 slide decks about the benefits of globalization, that benefits of 0:16:52.760 --> 0:16:56.400 moving your work to China from the United States. And 0:16:56.760 --> 0:17:00.560 so because of their reach and all these corporate ward rooms, 0:17:00.680 --> 0:17:03.640 they were able to spread this gospel about the benefits 0:17:03.640 --> 0:17:07.720 of off shorey. So just to unpack this, McKenzie profits 0:17:07.760 --> 0:17:11.800 by helping shareholders profit by firing American workers on mass 0:17:11.880 --> 0:17:15.560 in some cases, or firing them and moving their jobs overseas. 0:17:16.320 --> 0:17:20.200 And then they also profit by helping management profit by 0:17:20.240 --> 0:17:23.800 starting an executive pay practice that drives CEO pay into 0:17:23.840 --> 0:17:28.080 the stratosphere. That's quite clever, and it leads to a 0:17:28.240 --> 0:17:31.959 second eye opening aspect of the book. I learned that 0:17:32.040 --> 0:17:37.280 in multiple industries and engagements, mackenzie often profits from working 0:17:37.320 --> 0:17:40.400 for both sides of an issue. I was really struck 0:17:40.440 --> 0:17:45.160 by their relationship with not only Big Tobacco, who they 0:17:45.160 --> 0:17:49.320 worked with for years, but also their relationship with the 0:17:49.359 --> 0:17:54.400 FDA Center for Tobacco Products, which is responsible for regulating 0:17:54.720 --> 0:17:57.320 Big tobacco, and they worked with those entities, as I 0:17:57.400 --> 0:18:03.240 understand it, simultaneously, they also consulted with Jewel, which at 0:18:03.240 --> 0:18:07.000 the time claimed to be a smoking cessation product, as 0:18:07.359 --> 0:18:10.720 Jewel wound up marketing their product to teens and thereby 0:18:10.760 --> 0:18:16.359 addicting an entirely new generation to nicotine. And this strategy 0:18:16.400 --> 0:18:19.720 of working multiple size of the problem has has netted 0:18:19.720 --> 0:18:23.120 the company massive fees over the years, has it not? 0:18:23.760 --> 0:18:27.560 It really has. Almost since the beginning of McKenzie, they've 0:18:27.560 --> 0:18:29.840 been happy, and they've they've made it clear that they 0:18:29.880 --> 0:18:33.320 work for multiple companies in the same industry, so for example, 0:18:33.320 --> 0:18:35.920 they could work for four GM and Chrysler at the 0:18:36.000 --> 0:18:39.159 same time. But but what you said is on a 0:18:39.240 --> 0:18:43.760 different level entirely when McKenzie is working for both the regulator, 0:18:43.800 --> 0:18:46.800 with the FDA being the poster child, and then the 0:18:46.840 --> 0:18:50.320 companies that are actually regulated. And as you pointed out, 0:18:51.800 --> 0:18:55.280 the the idea that McKinsey was working um for big 0:18:55.280 --> 0:18:58.080 tobacco and they only stopped working for big Tobacco in 0:18:59.320 --> 0:19:04.120 one Yeah, and I guess somehow this is all legal 0:19:04.480 --> 0:19:08.720 question mark, So that is a question. It appears to 0:19:08.760 --> 0:19:11.800 be legal. You know, McKenzie had to pay more than 0:19:11.840 --> 0:19:15.240 six hundred million dollars are settled with these states attorneys 0:19:15.280 --> 0:19:18.560 general investigations last year into their work with opioid makers. 0:19:18.920 --> 0:19:23.119 They write Perdue and oh Melon crossed several of the 0:19:23.160 --> 0:19:27.639 opioid makers Jay and Jay that that they admitted no wrongdoing. 0:19:27.800 --> 0:19:31.399 And that's a constant theme. And you know, the certainly 0:19:31.440 --> 0:19:33.960 the Congress has been really looking into this conflict as well. 0:19:33.960 --> 0:19:37.680 There were some very testy hearing back in April when 0:19:38.160 --> 0:19:41.320 members of Congress were asking the head of mackenzie, this 0:19:41.359 --> 0:19:43.680 guy named Bob stirred Fell's point, like, you know, how 0:19:43.720 --> 0:19:46.000 can you work for the f d A and uh, 0:19:46.640 --> 0:19:49.479 the regulated companies like Perdue at the same time. Now, 0:19:49.520 --> 0:19:51.360 of course he would say, well, the work we did 0:19:51.400 --> 0:19:53.760 for the f d A wasn't specific to any of 0:19:53.760 --> 0:19:58.720 these companies, so there was no conflict, right, yeah, so 0:20:00.119 --> 0:20:06.480 legal or potentially legal? Would you consider that to be ethical? No? No, 0:20:06.800 --> 0:20:10.439 straight up no, yeah, you know, and neither right. And 0:20:10.440 --> 0:20:12.400 one thing we discovered is we talked to some people 0:20:12.400 --> 0:20:15.000 at the FDA or former people, senior people. Hey, did 0:20:15.040 --> 0:20:18.520 you know that McKenzie was also advising these drug makers, 0:20:18.520 --> 0:20:20.520 these tobacco makers at the same time they were advising you, 0:20:20.560 --> 0:20:24.000 And they didn't know it was. They were surprised, which 0:20:24.040 --> 0:20:27.280 is terrible. It's right, you know. And I've always thought 0:20:27.400 --> 0:20:30.040 mackenzie's secrecy is a little bit of just a kind 0:20:30.040 --> 0:20:32.920 of marketing ploy to create mystique, but it does seem 0:20:33.000 --> 0:20:35.840 like it's it's actually a really important part of their 0:20:35.880 --> 0:20:40.280 business model, because if you have total secrecy on everything 0:20:40.320 --> 0:20:43.960 that you're working for, both internally and externally, you can 0:20:44.000 --> 0:20:47.400 get away with stuff like that. That's right. We only 0:20:47.400 --> 0:20:50.640 know what we've uncovered, but you know, there's lots more 0:20:50.680 --> 0:20:54.239 secrets out there, I'm sure. Uh, And You can do 0:20:54.280 --> 0:20:57.320 a lot of things if no one knows what you're doing. Right. 0:20:57.800 --> 0:21:00.280 There was another story that you told in the book 0:21:00.320 --> 0:21:02.600 that I don't know whether this is working two sides 0:21:02.640 --> 0:21:05.040 of an issue, but I did find it cynical. You 0:21:05.119 --> 0:21:10.159 tell the story of Dixon Pinner, who is or was 0:21:10.280 --> 0:21:14.560 Mackensey's head of sustainability at the Aspen Ideas Festival, talking 0:21:14.600 --> 0:21:17.760 about the pressing need for corporations to take quick and 0:21:17.840 --> 0:21:22.800 dramatic action on climate change. That's great at the Aspen 0:21:22.840 --> 0:21:26.600 Ideas Festival. But this is a company that worked for 0:21:26.920 --> 0:21:31.080 years and continues to work with some of the biggest 0:21:31.320 --> 0:21:34.600 fossil fuel companies in the world. Right, So we called 0:21:34.680 --> 0:21:36.520 McKenzie out on this in a story in The New 0:21:36.560 --> 0:21:39.240 York Times a year ago, and it's a you know, 0:21:39.280 --> 0:21:42.320 it's a big chapter in our book. Again. If mackenzie 0:21:42.359 --> 0:21:44.800 was working with big oil, you know, the gas companies, 0:21:44.840 --> 0:21:48.160 the coal miners, to reduce their carbon emissions, that would 0:21:48.160 --> 0:21:51.280 be laudable. And Dick and Penner, he's like, he's head 0:21:51.280 --> 0:21:54.440 of the sustainability for them. He he knows about climate change. 0:21:54.440 --> 0:21:57.240 He he can really do a great presentation showing how 0:21:57.359 --> 0:21:59.520 urgent the problem is. And he's done lots of great 0:21:59.560 --> 0:22:03.080 report The problem is, I tell you, we did this 0:22:03.160 --> 0:22:07.240 story a year ago, and McKenzie is unapologetic about its 0:22:07.280 --> 0:22:09.879 work with these companies. What we tried to do, and 0:22:09.920 --> 0:22:11.639 it's in the book, is to show that a lot 0:22:11.720 --> 0:22:14.240 of their work with these companies has nothing to do 0:22:14.880 --> 0:22:16.960 with cutting their carbon emissions. It has everything to do 0:22:17.040 --> 0:22:20.119 with making them a more profitable and more productive coal 0:22:20.200 --> 0:22:24.119 mining company or oil company or gas company. In on 0:22:24.160 --> 0:22:27.640 their website, there all these studies of McKenzie is doing 0:22:27.720 --> 0:22:30.520 all this, these words about, you know, committed to protecting 0:22:30.560 --> 0:22:33.840 the planet, committed to reducing emissions, and yet at the 0:22:33.840 --> 0:22:37.760 same time, these big clients that they're working for are are, 0:22:37.920 --> 0:22:40.639 you know, some of the world's biggest polluters. Yeah, some 0:22:40.800 --> 0:22:43.400 of the data that you have in the book is incredible. 0:22:43.440 --> 0:22:45.520 Let me just read a bit. Is a note I 0:22:45.560 --> 0:22:48.600 wrote here for myself for a firm committed to protecting 0:22:48.640 --> 0:22:54.160 the planet. McKenzie counts seventeen mining and fossil fuel companies 0:22:54.200 --> 0:22:58.640 among its biggest clients. Collectively, those clients have earned McKenzie 0:22:58.720 --> 0:23:01.520 hundreds of millions of dollars in recent years. Since two 0:23:01.600 --> 0:23:04.960 thousand and ten, McKenzie has worked with forty three of 0:23:05.040 --> 0:23:08.360 the hundred companies that have pumped the most carbon dioxide 0:23:08.359 --> 0:23:12.720 into the atmosphere since nineteen sixty five. These forty three 0:23:12.760 --> 0:23:15.840 companies were responsible for thirty eight percent of the entire 0:23:15.960 --> 0:23:21.639 planets carbon dioxide output in and Chevron number three on 0:23:21.680 --> 0:23:25.080 the list, paid McKenzie fifty million dollars in fees in 0:23:27.160 --> 0:23:31.080 So they're hardly not in the carbon business and for 0:23:31.119 --> 0:23:35.320 them to make any claims about being pro sustainability seems 0:23:35.400 --> 0:23:38.960 ridiculous to me and a little dangerous. It does. And 0:23:39.040 --> 0:23:42.040 I tell you, you know, they were apologetic about their 0:23:42.080 --> 0:23:45.280 work with opioid makers, they were apologetic about their work 0:23:45.400 --> 0:23:49.200 in South Africa, but they are not apologetic about their 0:23:49.240 --> 0:23:51.920 work with these carbon emeters. And that's not to say 0:23:51.920 --> 0:23:54.800 that mckenzy doesn't do good work, you know, on sustainability. 0:23:54.840 --> 0:23:57.119 They do some and uh and they do work with 0:23:57.160 --> 0:24:00.800 some great green companies and and that's a fact, but 0:24:01.280 --> 0:24:04.280 they also do you know what we outline that these 0:24:04.320 --> 0:24:06.879 work with these big polluters. You know, one of the 0:24:06.960 --> 0:24:08.399 things that you point out in the book is that 0:24:08.480 --> 0:24:11.520 McKenzie is really good at spreading ideas and they've done 0:24:11.520 --> 0:24:15.080 it many times over their history, and we're now feeling 0:24:15.400 --> 0:24:18.600 what I hope is a new day dawning in capitalism, 0:24:18.720 --> 0:24:22.679 and mackenzie could be tremendously powerful if they decided to 0:24:22.760 --> 0:24:27.200 really get behind, for instance, conscious capitalism. I couldn't agree more. 0:24:27.359 --> 0:24:30.320 One of the things McKenzie does really well is higher 0:24:31.160 --> 0:24:34.760 really smart people who will work their butts off. And 0:24:35.040 --> 0:24:38.639 if those people can be harnessed to consistently do things 0:24:39.200 --> 0:24:42.320 that are good and will make the world more sustainable 0:24:42.359 --> 0:24:46.080 and more equitable, you know, all within the free market framework, 0:24:46.320 --> 0:24:49.960 which is not a contradiction, then hats off to them 0:24:50.760 --> 0:24:55.040 if they can do that. Let's touch on another topic 0:24:55.280 --> 0:24:58.679 that is contained in the book which I did not realize, 0:24:58.840 --> 0:25:03.680 which is McKenzie's were with authoritarian governments. You tell two 0:25:03.760 --> 0:25:07.560 stories about this, McKenzie's work with the Chinese government and 0:25:07.600 --> 0:25:11.800 their work with the Saudi Arabian government, and it just 0:25:11.840 --> 0:25:15.440 struck me that mackenzie is is very good at finding 0:25:15.520 --> 0:25:20.560 growth industries and attaching themselves to them, and authoritarianism seems 0:25:20.600 --> 0:25:24.440 to be spreading around the globe. Is this the new 0:25:24.520 --> 0:25:29.080 growth industry for mackenzie? So um, After we wrote about 0:25:29.080 --> 0:25:31.640 their work in China, after we wrote about their work 0:25:31.640 --> 0:25:35.480 in Saudi Arabia. McKenzie did say that they've changed the 0:25:35.560 --> 0:25:39.280 way they select clients and now they say they will 0:25:39.320 --> 0:25:44.520 not work for the defense ministries, justice ministries, lease interior 0:25:44.560 --> 0:25:49.119 ministries of authoritarian countries. Um. But a lot of the 0:25:49.240 --> 0:25:51.680