The consulting company McKinsey "helped invent what we think of as American capitalism and spread it to every corner of the world," Duff McDonald writes in his new book The Firm: The Story of McKinsey and Its Secret Influence on American Business.
If one accepts Mr. McDonald's idea of McKinsey as a stand-in for American capitalism, then it's not a particularly heroic tale.
The capitalist consultants ended up doing lots of work for Enron and celebrating its business model. The McKinsey consultants also did some "feeding at the government trough," working for a Tanzanian tyrant and big-government British institutions such as the BBC and the National Health Service. The climax is the conviction of the firm's one-time managing director, Rajat Gupta, for giving illegal stock tips to hedge fund manager Raj Rajaratnam.
Mr. McDonald also suggests, but doesn't come quite out and say so directly, that the problems at McKinsey may be read not only as those of American capitalism but of American elites. "Yes, it's elitist," another one-time McKinsey managing director, Ron Daniel, acknowledged. Or as one former McKinsey consultant, James Kwak, put it, the Harvard and Yale graduates that McKinsey hires "are driven by desire for status and fear of failure."
Mr. Daniel described McKinsey consultants as "a dull, anonymous bunch" and while he may have been being disarmingly modest, there's something telling about the fact that the most colorful and prominent McKinsey consultants in this account — Ken Ohmae and Tom Peters — both left the firm. Mr. Peters left McKinsey eight months before his book In Search of Excellence, which sold 5 million copies, came out.
The other non-anonymous figure who attracts attention is Marvin Bower, a graduate of Brown, Harvard Law School, and Harvard Business School and the man who really built McKinsey into what it is. A consultant once told Bower of his plans for an upcoming ski trip. The book reports that Mr. Bower, in all apparent seriousness, "said he regarded skiing as unprofessional …'You're running the risk of breaking your leg, and having that get in the way of client work.'"
Mr. McDonald's book shows that kind of focus has its virtues, but also has its limits.