How McKinsey has influenced companies and governments behind the scenes for decades

Judy Woodruff:

Now, a new book attempts to shed light on an extremely influential, but little understood organization, the consulting firm McKinsey & Company.

Amna Nawaz got an exclusive first look.

Amna Nawaz:

When Tiffany Glover was around 18 years old, the Natchitoches, Louisiana, resident had her first menthol cigarettes.

Tiffany Glover, Former Smoker:

Honestly, it made it easier to smoke. It masks the taste, the harshness of the smoke in my lungs.

Amna Nawaz:

Now 45, Glover looks back and recalls learning about menthols from the ubiquitous ads she saw in Black publications like "Ebony" and "Jet" magazines.

Tiffany Glover:

Those magazines were full of menthol cigarette ads, and the people in the ads looked like they were having the time of their lives.

Amna Nawaz:

Those images were in stark contrast to what Glover saw in real life.

Tiffany Glover:

This is a picture of my mother.

Amna Nawaz:

When she was just a teenager, her mother died from lung cancer at the age of 48 after decades of smoking.

Tiffany Glover:

She went from being a vibrant teacher that was in the prime of her career to she couldn't even get out of bed.

I just wish that, earlier, we could have known and been honest about the dangers of smoking, because maybe that would have prevented my mother from smoking.

Person:

There is a definite significant health hazard associated with cigarette smoking.

Amna Nawaz:

It was way back in 1964 that the U.S. surgeon general first concluded in a report to Congress that cigarettes cause cancer and other diseases. But it wasn't until decades later, in 2006, that cigarette companies were found guilty in federal court of misleading the public about the dangers of smoking.

And, until very recently, the tobacco industry still marketed its products with the help of the consulting firm McKinsey.

Walt Bogdanich, Co-Author, "When McKinsey Comes to Town: The Hidden Influence of the World's Most Powerful Consulting Firm": For all these years, they have been helping all the major cigarette companies sell more cigarettes, when 480,000 people are dying every year.

Michael Forsythe, "When McKinsey Comes to Town: The Hidden Influence of the World's Most Powerful Consulting Firm": After smoking had been banished from restaurants, banished from offices, and yet, as recently as the last few years, and, in fact, until last year, McKinsey was working for these companies.

Amna Nawaz:

In their new book "When McKinsey Comes to Town," New York Times investigative reporters Walt Bogdanich and Michael Forsythe take a rare look into the cloistered company that, for 96 years, has advised the world's most profitable firms and powerful governments, making recommendations on things like maintenance schedules, salaries, marketing, regulations, and more and yet, for the most part, has remained out of the public view.

We stopped by McKinsey's headquarters at Three World Trade Center in Lower Manhattan.

It's such a powerful company, and yet you would never know they were here. There's not a single McKinsey sign anywhere. Why is that?

Walt Bogdanich:

They don't want anyone to know anything about them. They want everything done in secret. And if that includes where they work, then so be it.

Michael Forsythe:

That's a cultural reason, a corporate cultural reason, that they always put the client first is their mantra, and they take a step back. They work behind the scenes. They let the client take credit when things go well, and they let the client take credit when things go badly as well.

Amna Nawaz:

For years now, Forsythe and Bogdanich have reported on McKinsey's work behind the scenes, examining its contract with Immigration Enforcement during President Trump's family separation policy, its work for the oil and gas industry, even as it pledged to address climate change, its guidance to adversarial governments in Saudi Arabia and Ukraine, and to state-owned firms in Russia and China, how it helped to juice opioid sales to Purdue Pharmaceuticals and Johnson & Johnson at the height of the addiction epidemic.

And the conflicts of interest along the way, advising both us regulators like the FDA and the companies it regulated.

What pattern did you see emerge over those years that said to you, this all needs to be pulled together in a book? What's the common thread of all the stories here?

Walt Bogdanich:

Secrecy, power, unaccountability?

And that draws investigative reporters everywhere. And that's what interested us.

Michael Forsythe:

Finding out about the reach of the company around the world, some of the harm that they have done to people around the world, whether in the United States or elsewhere through their work, was very compelling.

Amna Nawaz:

Over nearly a century of work, McKinsey, they argue, has been instrumental in shaping parts of American society, from offshoring to securitized debt, to CEO compensation.

Walt Bogdanich:

One issue that is really troubling in this country, I think everyone would agree, is inequality. And McKinsey has contributed mightily to that, going back for instance, to 1950, when one of their consultants decided to look at how much executives were making vs. how much the workers were making.

And he concluded that, well, the workers are catching up, so maybe the corporations ought to figure out ways to pay the leaders more. Every year, they built on that, more and more and more. And executives — the gap between what the leaders were making of corporations and the workers kept growing and growing and growing over the years.

Amna Nawaz:

Overseas, their reporting found, some of McKinsey's work was at odds with U.S. government interests.

Michael Forsythe:

In one instance, they were working for a company called China Communications Construction Company. And this is the company that did a lot of work building the islands in the South China Sea, these artificial islands that China is militarizing and is making the South China Sea into basically what could become a Chinese lake.

This is very much a problem for U.S. foreign policy, for the U.S. Navy. Yet, at the same time, McKinsey has also been doing consulting work for the Pentagon and for the U.S. Navy.

Amna Nawaz:

The private firm, which takes in an estimated $10 billion in revenue annually, has always been a pipeline for prestige and power. Among its alumni are Transportation Secretary Pete Buttigieg, Arkansas Senator Tom Cotton, outgoing Facebook executive Sheryl Sandberg, and many more at the highest levels of private and public sectors in the U.S. and globally, as well as their children.

Narrator:

This door, our door, leads to an incredibly rich experience.

Amna Nawaz:

McKinsey recruits heavily from the Ivy League, promising not only lucrative careers, but the chance to make a difference.

Narrator:

You will team with exceptional clients to take on some of the world's toughest challenges.

Michael Forsythe:

This is very attractive to idealistic young students. If they don't want to go work for Goldman Sachs, if they don't want to go work for Morgan Stanley, where it's all about money, here's a chance for them to work for a very prestigious organization that they can actually do some good in.

That's the pitch, at least. Unfortunately, when a lot of these students get hired by McKinsey and start working there, they're disabused of that. They're often working for things that have absolutely nothing to do with these lofty goals.

Amna Nawaz:

In a statement to the "NewsHour," McKinsey said the book "fundamentally misrepresents their firm and their work," adding — quote — "When we have made mistakes, we acknowledged them and made changes," including ending all-tobacco related work last year and a new client selection policy they call more rigorous than any other in our industry.

They point to their work helping to scale up global ventilator production and COVID-19 vaccines, decarbonizing power generation and carbon removal investments, and supporting refugees and rebuilding in Ukraine. And they note among their past clients is the author's own employer, The New York Times.

Are there more times that they live up to their values, that they don't — I mean, are the stories you're reporting the exception or the rule?

Walt Bogdanich:

They're the exception, but an important exception, in much the same way that, when the planes crash, that's an exception, because most planes are safe.

But it behooves us to look into incidents where people are harmed. And that's what we're doing. We're not saying McKinsey is responsible for all the evils in the world. No, they're not. They do good things. They work for nonprofit groups. But that's the side that they want people to know about. We thought it was our responsibility to bring more accountability to this incredibly powerful company.

Amna Nawaz:

How do you hold a firm like McKinsey accountable, though? I mean, to be fair, they don't make cigarettes. They don't manufacture the opioids. How do you hold them accountable?

Michael Forsythe:

For us, as journalists, the way we would hold them accountable is to just tell the world what they do. And that's what we have been doing for years now.

And I think there is more awareness now about McKinsey. And I hope this book allows more people to read about them.

Walt Bogdanich:

We want people to know how this company affects their lives, how it affects their children, how it affects them, and how it affects their future, and how it impacts one of the worst problems in America today, which is inequality, which is a problem that is really eating at the soul of this country.

Michael Forsythe:

You know, the Billy Joel song goes, we didn't start the fire.

And McKinsey didn't start the fire, but they fanned the flames on so many issues that are so important to Americans today, whether it's offshoring, the securitization of assets that led to the global financial crisis, managed care system and increasing health care costs, the opioid epidemic tobacco.

If you understand McKinsey and understand the story of McKinsey, you do understand a little bit more the story of America in the recent 70 years or so.

Amna Nawaz:

That is the story Bogdanich and Forsythe will continue to tell.

For the "PBS NewsHour," I'm Amna Nawaz in New York.