When Puerto Rico started bankruptcy proceedings in 2016, the US island territory became McKinsey’s newest client. The company was hired to advise a federally appointed oversight board and, according to a report in New York magazine, set about creating an “aspirational vision” for Puerto Rico, appointing a 31-year-old Harvard graduate as the project’s senior full-time consultant. A 2016 Columbia graduate assisted with financial calculations and job cuts (euphemistically termed “rightsizing measures”), and a recent Yale graduate handled hurricane damage assessment. Ultimately, McKinsey advised on a “schema” for the island’s ailing economy that included privatising public enterprises and removing labour protections.
The firm’s work in Puerto Rico is one of many stories in Mariana Mazzucato and Rosie Collington’s new book, a brisk and approachable guide to the consulting industry and its discontents. Management consultants are frequently used by corporate executives or governments to provide a veneer of authority – and a convenient scapegoat – for controversial “reforms”. Their role in public life has increased: as one Conservative minister put it in 2020, Whitehall has been “infantilised” by its reliance on management consultants. Mazzucato and Collington’s argument is an elaboration of this point. They claim that consultancies have weakened businesses and hollowed out state capacity. “The more governments and businesses outsource,” they write, “the less they know how to do.”
This is particularly clear in Britain, which is the second largest market for consultants globally after the US. Take Covid contracts. Rather than approaching the test-and-trace programme as an opportunity for the public sector, ministers and civil servants relied on a familiar roll call of consultancy firms. At one point, the equivalent of more than £1m a day was spent on consultants; some senior advisers billed more than £6,000 for a single day’s work.
Mazzucatto and Collington’s book cites many journalistic reports and academic studies, giving the occasional impression of a literature review. Its most compelling sections are interviews conducted with consultants themselves. Of working on the UK government’s Covid response, one said: “It just seemed like every project had loads of wandering Deloitte people … the sheer volume of them that were around created the situation of these zombie emails just arriving all the time … taking our attention away from actual work.”
What’s both infuriating and amusing is the assumption that fresh-faced consultants airlifted in from one of the big firms know better than workers on the office floor or staff in the NHS, when they often seem to know very little. The industry works on the basis that “knowledge can be purchased, as if off a shelf”, Mazzucato and Collington write, and its solutions can appear comically simplistic. The book features a copy of the Boston Consulting Group’s “growth-share matrix”, a diagram whose cutout silhouettes of a cow, a star, a dog and a question mark were intended to help businesses separate profitable ventures from dead weight. Introduced in 1970, the diagram was widely taught in business schools in the decades that followed. It wouldn’t look out of place in a children’s book.
So why do governments keep falling for it? As the title of this book implies, consulting is, at least in part, a confidence trick. A consultant’s job is to convince anxious customers that they have the answers, whether or not that’s true: “Clients often interpret nervousness as a lack of conviction about a particular recommendation,” explains one textbook on the matter. The con feeds off itself, Mazzucato and Collington suggest: the bigger such companies grow, the weaker governments become, and the more likely they are to look to the consulting industry to rescue them.
But the broader answer requires taking a longer view. Since the 1980s, politicians have sought to make the public sector function more like a business, using mechanisms such as performance-related pay and cost-benefit analyses to drive private sector values into the public realm. As Michael Heseltine put it one year after Margaret Thatcher took power: “The management ethos must run right through our national life – private and public companies, civil service, nationalised industries, local government, the National Health Service.” In falling for this narrative, we’ve all been conned.
• The Big Con: How the Consulting Industry Weakens Our Businesses, Infantilizes our Governments and Warps our Economies is published by Allen Lane (£25). To support the Guardian and Observer order your copy at guardianbookshop.com. Delivery charges may apply.
