McKinsey Goes to Washington

The McKinsey Managing Partner, Bob Sternfels, was hauled before the U.S. House of Representatives Committee on Oversight & Reform on April 27, 2022. We have not seen tin ears like this since Jack Haley trod the yellow brick road with Dorothy and Toto.

Mr. Sternfels still does not see a conflict with McKinsey’s work in advising opioid firm Purdue even as it was advising the FDA.  He said that, “McKinsey did not — did not–serve both FDA and Purdue on opioid-related matters.”  Michael Forsythe, Walt Bogdanich, and Chris Hamby, “Lawmakers Dismiss McKinsey’s Apology on Opioid Crisis as ‘Empty,'” New York Times, April 28, 2022, p. A21.

Let’s see.  McKinsey was working with Purdue and other opioid producers to stop FDA regulations on opioid safety restrictions .  At the same time, McKinsey was working with the FDA on its organizational structure and processes.  Processes must not include include agency rule -making. The Barometer is quite certain the FDA never mentioned opioids, its singular biggest challenge in working with its consultant on how to run the agency. Likewise, the Barometer is quite certain McKinsey never mentioned opioids in its work with the FDA.  Ergo, no conflict to see here.  Move along.

The committee members were on a fool’s errand in seeking a conflicts admission from McKinsey.  McKinsey does not see conflicts.  McKinsey does not have conflicts.  McKinsey is not subject to the ethical constraints of conflicts of interest.  And McKinsey is shocked, shocked that anyone would suggest it might have had a conflict or two in its history.

Stunningly, this whopper of a stance was not the worst part of the hearing.  The worst part was  a McKinsey slide from its work with Purdue to turbo charge opioid sales. The slide looks like something undergraduates in a marketing class would develop for their team project.  Developed at about 3:00 AM the day the team project was due, and probably after some frat-level drinking. There is a picture of a man wearing dollar-sign joke glasses fanning dollar bills. There are terms such as “regular champions” and “superstars”  that Purdue was to use for its salespeople. Those reaching champion level would get cash and the chance to meet, in the boardroom,  the CEO! There was even a picture of Donald Trump and “The Apprentice” logo on the slide.  The Barometer wonders whether McKinsey got permission to use both the photo and the logo for its commercial purposes.

The slide tells the whole story of McKinsey — tawdry and worn sales tactics pawned off by Harvard MBAs on boards and managers too gullible to see the sophomoric content of their consultant’s work product.

There’s a reason McKinsey had to ante up $600 million to settle with the government for its role in the opioid crisis.  They were pushing sales as deaths and addiction climbed. The firm was all in on selling, selling, selling.  But McKinsey’s apology in the hearing was, “Who knew?” Mr. Sternfels’ only regret was that McKinsey “failed to recognize the broader context of what was going on in society around us.”

Funny, the Barometer thought that was why companies paid consultants –to tell them just that — what they were missing in running their businesses.  McKinsey just joined the party to “springboard” Purdue in its “once in  a lifetime” opportunity for success.  Worked out really well for everyone.

About mmjdiary

Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD. The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards. Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio. She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News. In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles. Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
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