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02/13/05 v.3
[6,000 words]
Excerpt from "House of Lies: How
Management Consultants Steal Your
Watch and Then Tell You the Time,"
by Martin Kihn (Warner Books,
pub. date: March 21, 2005)
second Tina!
Suddenly, hes gone from the booth and projectiled across
the precious ivory Aubusson to a slightly frightened-looking
woman who just walked in. They shake hands, briefly, nodding
is it Tina Brown? No
. . .
. . .
Tommy
references
. . .
. . . . I just wanted to
. . .
. . .
. . .
deep
in
. . .
of pop-culture I
kind of tell.
How so?
The deferrals, for one. Theyd been deferring new
associates since January. The take-it-or-leave-it offer was
wait six months to start work or take $15,000 and say goodbye.
The economy is so dismal now, the alternatives so untasty and
infrequent, most everyone opted for time off. I wasnt deferred
because I was the only person who volunteered to start in May,
without even a week off after school. At first school friends
called me crazy, and then they stopped.
What did they say about that?
Nothing much. They had a conference call, we all called
in. They said there were some capacity issues in North America
and they were going to make a few adjustments so they didnt
have to do anything later on anything like layoffs, they
meant.
They said that?
Im not sure they said it exactly, but it was definitely
presented like a one-time thing. That was that
Then they fired all the consultants. (At my firm,
consultant is the term used to describe an associate without
an MBA.)
They fired all the consultants maybe twenty people. Not
so much.
Is that it then? Now its over?
The waiter comes up and I let my friend order for me. I am
very bad at Japanese food. Like all recent b-school graduates I
revere the Japanese to the point almost of idiocy but I are
very, very bad at Japanese food. Whatever he orders, I am not
going to like. Silence follows the waiters retreat, and that
whiff of mild elation, the one that comes with knowing youve
got something coming to you.
He says, I dont think so.
What?
I dont think its over.
Why?
I heard some things. Theres a ton of people on the beach
[i.e., not billing work]. Louis told me theyre something like
eighty percent below plan for the year. Louis was a senior
partner an Ohioan with an oddly Southern cadence and a pals-y
manner he was known as the friendly partner. There was only
one.
Eighty percent?
Or something. Its really bad.
Maybe the plans too high.
My friend lowers his voice, glances around. I would get
. . .
. . .
. . .
happened was we had some other people on the list but they had
defenders, there was some partner or principal in the room
spoke up for them. We went alphabetically. We got to him and no
one spoke. I should have said something but I dont know. It
was hours wed been in there, I was hungry.
The food arrives. It looks disgusting.
I say: You guys were best friends.
Come on, Marty.
Are they gonna do it again? Next appraisal cycle?
I dont think so. This is one time and move on.
I realize that my mentor, who seemed so genuine and real
when I worked at the firm last summer the only Mr. Media with
these qualities has changed too. He has been vectored into
the House of Lies.
thing is going.
My reaction?
Yeah we wanted to know what your thoughts were if you
took a step back for a second what you thought about the
overall direction were headed in and if you had any ideas
any tweaks for something different?
He waits. Maybe we have lost him
. . .
got scared. It turned out the slide implied quite clearly that
McKinsey was on a path toward total world domination.
Starting at its then-current base of about 10,000
consultants, growing at 20% annually, McKinsey would employ
every single man, woman and child in America as soon as May
2060. Fifteen years later, the firm would have to look to other
planets for its clients, for every person on earth would be a
McKinseyite. I thought: I will be very old in May 2060 but it
wont really matter. Theyll have to hire me. (Turns out there
is an alternative to 20% annual growth the size of McKinseys
professional staff fell from 12,000 in 2000 to about 7,500 in
2002, the year the firms president was quoted saying, We had
no professional layoffs.)
I do not go to work for McKinsey, of course, but I do have
occasion to work with them, shortly after the Rainmaker joins
their choir. The reason, oddly enough, is September 11th.
After that tragedy, the top consulting firms are asked by
a non-profit development group called the New York City
Partnership if they wouldnt mind donating some time and
expertise to productive work the only kind they can really
contribute. Namely, research and speculation. The result is a
massive multi-firm effort to analyze in rather minute detail
the effects of the attacks on the economy of greater New York.
It is also thought the firms might make suggestions for how the
city could rebuild itself more quickly. Seven major firms agree
to donate their staff and resources, and each is assigned a
particular area of the economy to examine: real estate,
insurance, financial services, health care, media and so on.
The output of the effort is to be a report presented directly
to people in a position to act, like the Deputy Mayor and
Senator Hillary Clinton.
Perhaps because of its status as top-tier consultant of
choice to the City of New York, McKinsey commands the economic
model. In any consulting engagement, the model pronounced
The Model is the nexus of power. It is an Excel workbook, or
multiple workbooks, that is erected carefully over a period of
weeks with an elaborate cross-mesh of references and formulae
so complex it is only really understood by its Maker, and often
not even by Her. The Model is a holy thing, like the Nomad in
Star Trek. It accepts your offerings and issues its cryptic
response, which is never questioned, only puzzled over.
McKinsey is the Maker, and it is never happy.
The Model is a mathematical re-creation of the New York
City economy, specifically its overall Gross City Product. The
inputs demanded from each subteam are employment numbers and
total output, or value-add. These inputs are demanded weekly,
Support
functions
Transition
plan
31
1.3
1.3 M
M
1.1%
1.1%
Avg.
$41,800
Avg. HH
HHIncome:
Income:
$41,800
(a)
Sales
Sales by
bySegment
Segment(a)
NYC
$4.3
NYC Resident
Resident
$4.3BB
Daytripper
$0.2
Daytripper
$0.2BB
Commuter
$0.1
Commuter
$0.1BB
TTourist
ourist
$0.1
$0.1BB
TOTAL
$4.7
TOTAL
$4.7 B
B
QUEENS
QUEENS
Total = $22.1 B
STATEN
STATEN ISLAND
ISLAND
Population
0.4
Population (2000):
(2000):
0.4 M
M
CAGR
1.7%
CAGR 1990-2000:
1990-2000:
1.7%
Avg.
$75,500
Avg. HH
HHIncome:
Income:
$75,500
(a)
Sales
ent(a)
Sales by
bySegm
Segment
NYC
$2.5
NYC Resident
Resident
$2.5BB
Daytripper
$0.1
Daytripper
$0.1BB
Commuter
$0.1
Commuter
$0.1BB
TTourist
ourist
$0.1
$0.1BB
TOTAL
$2.8
TOTAL
$2.8 B
BRONX
BRONX
Population
Population (2000):
(2000):
CAGR
CAGR 1990-2000:
1990-2000:
BROOKLYN
BROOKLYN
Population
2.3
Population (2000):
(2000):
2.3 M
M
CAGR
0.8%
CAGR 1990-2000:
1990-2000:
0.8%
Avg.
$52,900
Avg. HH
HHIncome:
Income:
$52,900
(a)
Sales
Sales by
bySegment
Segment(a)
NYC
$9.7
NYC Resident
Resident
$9.7BB
Daytripper
$0.5
Daytripper
$0.5BB
Commuter
$0.3
Commuter
$0.3BB
Tourist
$0.3
Tourist
$0.3BB
TOTAL
$10.8
TOTAL
$10.8B
B
Population
2.2
Population (2000):
(2000):
2.2 M
M
CAGR
1.4%
CAGR 1990-2000:
1990-2000:
1.4%
Avg.
$58,700
Avg. HH
HHIncome:
Income:
$58,700
(a)
Sales
Sales by
bySegment
Segment(a)
NYC
$9.5
NYC Resident
Resident
$9.5BB
Daytripper
$0.4
Daytripper
$0.4BB
Commuter
$0.3
Commuter
$0.3BB
Tourist
$0.2
T ourist
$0.2BB
TOTAL
$10.4
TOTAL
$10.4B
B
(a) Estimate for 2000 based upon Clar itas, Inc. sales mix data by boro ugh, and BA&H customer segm entation analysis.
Source: New York Co nventi on an d Visitors Bure au (NY & Comp any); NYC Com ptrollers Office, Bureau of Asset Managem ent; US Census; BA&H analysis
-2-
The End