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Tom Peters: McKinsey’s work on opioid sales hits new low

The writer is an author on management and his next book is ‘Excellence Now: Extreme Humanism’

This month, McKinsey accepted to pay nearly $ 600 million to address allegations that his advice had exacerbated the deadly opioid crisis in the United States.

The consulting firm advised Purdue Pharma to pay “discounts” to pharmacies based on the number of people who have died or become dependent after taking the company’s pain reliever OxyContin. A presentation 2017 bloodlessly calculated that if Purdue paid $ 14,810 per ‘event’ and 2,484 drugstore chain CVS customers overdosed or became addicted in 2019, Purdue would pay CVS $ 36.8 million this year- the.

As a McKinsey alumnus, my reaction was simply, “Dear God!” My decades of pride in the company evaporated when I read the rules. In fact, I seriously asked a colleague, “Should I remove McKinsey from my CV?”

Taking a step back, I worked for McKinsey from 1974 to 1981. I signed up after getting my MBA at Stanford, and I was delighted and proud of the job offer, which I accepted in one. flash.

Indeed, I was at McKinsey in 1980 when I wrote my first article on research on organizational effectiveness that I was doing for the company. He was covering the highlights of what was to become In search of excellence, my book with Bob Waterman. He stressed the importance of organizational culture; invest in people; trying billions of things rather than sticking to a prescribed plan; and my favorite, what the executives at Hewlett-Packard called manage while wandering. In other words, leaders should stay in direct and constant contact with frontline workers rather than sitting in their desks chewing on spreadsheets.

When my article came out, mud hit the fan at McKinsey’s Manhattan headquarters. The bread and butter of the company and the brand was strategy first, strategy second, no ifs and or buts. I was told the New York office manager wanted me to come immediately. Only the intervention of McKinsey CEO Ron Daniel saved my job.

To me, that angry reaction says a lot about how McKinsey ended up paying nearly $ 600 million to 49 states to settle, without admitting responsibility, allegations that she urged Purdue Pharma to ‘supercharge’ sales. of OxyContin via tactics including the discount formula.

I am angry, disgusted and disgusted. The McKinsey I served was – in my experience – an honorable institution. How could this have happened to my beloved employer?

Nostalgia is a fun thing. I am 78 years old. My great friends from my time at the firm include Waterman, and I had close friends at the firm from Dallas to Tokyo and Munich. I can honestly say that I have never witnessed anything that even approached dishonorable behavior.

But before I don a cloak holier than you, I must admit that I have only known and worked with two people who spent time in federal prison. Both were from McKinsey. One was Jeff Skilling, the CEO of Enron who drove the company to fraud and bankruptcy. The other was my close friend and former lead dog of McKinsey Rajat Gupta, who served a sentence for insider trading. I’ve never experienced any unwanted behavior from either – but I can’t say the good old days were actually the good old days.

McKinsey is now a giant with more than $ 10 billion in revenue, 130 and more offices, and 30,000 employees. Size can be a major factor in business mismanagement. But I think the problem is deeper. McKinsey is one of the largest employers of MBA graduates and has been a top choice for many years, if not decades.

In my opinion, this is not unrelated to the OxyContin case. I have long argued that we should “close all business schools”. This rant is hyperbolic, but my reasoning is that business schools typically focus on marketing, finance, and quantitative rules. The “people stuff” and “the culture stuff” are infrequent in almost all cases.

McKinsey is full of high IQ MBAs addicted to spreadsheets and PowerPoint presentations. The same goes for many other places that have collapsed – after all, the most important analysis of the Enron fiasco has been dubbed The smartest guys in the room. Additionally, McKinsey’s typical mission is to improve market share and profitability.

This combination, taken too far, is a toxic combination in my opinion. Keep in mind that McKinsey’s recommendations to Purdue were aimed directly at extreme sales improvement, and the analysis failed to address the potential for specific incentives to increase addictive and destructive behavior.

So how can we solve this problem? By focusing on the “corporate moral responsibility“. Most of us work for a company, whether it has six or 16,000 employees. Business is do not part of “the community” – business is the community. The pandemic and our heightened awareness of racial inequalities have only increased the need for businesses to understand this.

I can’t close a discussion of what happened at McKinsey without taking a look at Milton Friedman. He introduced the idea that maximizing shareholder value should be the raison d’être of a company. This has led to an insane surge in profitability at all costs. Investment of corporate profits in people and research has fallen to the ground since then. A rigorous study found that the share of profits going to people and R&D fell from 50 percent in the 1980s to 9 percent in the 2000s.

I loved my Stanford and McKinsey years. But I don’t even remember a single moment directly related to the moral responsibilities of the company. Contempt for higher social goals is nothing new. But for me, the McKinsey-Purdue Pharma case represents a new low.

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