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The Big Con: How the Consulting Industry Weakens Our Businesses, Infantilizes Our Governments, and Warps Our Economies - Hardcover

Mazzucato, Mariana; Collington, Rosie

 
9780593492673: The Big Con: How the Consulting Industry Weakens Our Businesses, Infantilizes Our Governments, and Warps Our Economies
Hardcover
ISBN 10: 0593492676 ISBN 13: 9780593492673
Verlag: Penguin Press, 2023

Inhaltsangabe

A vital and timely investigation into the opaque and powerful consulting industry—and what to do about it

There is an entrenched relationship between the consulting industry and the way business and government are managed today that must change. Mariana Mazzucato and Rosie Collington show that our economies’ reliance on companies such as McKinsey & Company, Boston Consulting Group, Bain & Company, PwC, Deloitte, KPMG, and EY stunts innovation, obfuscates corporate and political accountability, and impedes our collective mission of halting climate breakdown.

The “Big Con” describes the confidence trick the consulting industry performs in contracts with hollowed-out and risk-averse governments and shareholder value-maximizing firms. It grew from the 1980s and 1990s in the wake of reforms by the neoliberal right and Third Way progressives, and it thrives on the ills of modern capitalism, from financialization and privatization to the climate crisis. It is possible because of the unique power that big consultancies wield through extensive contracts and networks—as advisors, legitimators, and outsourcers—and the illusion that they are objective sources of expertise and capacity. In the end, the Big Con weakens our businesses, infantilizes our governments, and warps our economies.

In The Big Con, Mazzucato and Collington throw back the curtain on the consulting industry. They dive deep into important case studies of consultants taking the reins with disastrous results, such as the debacle of the roll out of HealthCare.gov and the tragic failures of governments to respond adequately to the COVID-19 pandemic. The result is an important and exhilarating intellectual journey into the modern economy’s beating heart. With peerless scholarship, and a wealth of original research, Mazzucato and Collington argue brilliantly for building a new system in which public and private sectors work innovatively for the common good.

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Über die Autorin bzw. den Autor

Mariana Mazzucato, PhD, is professor in the Economics of Innovation and Public Value at University College London, where she directs the Institute for Innovation and Public Purpose. Her bestselling books include The Entrepreneurial State, The Value of Everything, and Mission Economy. Her many prizes include the 2020 John von Neumann Award and the 2018 Leontief Prize for Advancing the Frontiers of Economic Thought. She is chair of the World Health Organization’s Council on the Economics of Health for All and a member of the United Nation’s High Level Advisory Board for Economic and Social Affairs.
Rosie Collington is a PhD candidate at the University College London Institute for Innovation and Public Purpose, where she researches outsourcing. She has written for The Guardian (London), openDemocracy, and The Independent (London), has published with New Political Economy and the Institute for New Economic Thinking, and has conducted policy research for the CommonWealth, and the British Heart Foundation.

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1. Introduction: The Big Con-A Confidence Trick

To overcome the great challenges of our time-from pandemics to the climate crisis-requires ambition and prowess. All types of organizations in our economies must be guided by experience and technical knowledge, and people with project management skills. Businesses, governments and organizations from civil society with these capabilities can then work together to meet our collective social, economic and environmental needs.

And yet this does not describe the world we live in. Many governments have stopped investing in their own capacity and capabilities, and because they fear failure they do not take risks. Many businesses have shirked responsibility for change, and are focused on earning short-term profits through easy, unproductive strategies, such as buying back their own shares to boost stock prices, or not paying workers their fair share. Bad governance in both business and the state has over the last half century caused short-termism to overshadow investments needed for progress. These trends have depleted organizations of knowledge, skills and vision.

And one group of actors has ridden the wave of this form of capitalism, and the underlying depletion of capabilities, earning huge sums of money in the process: the consulting industry.
Consulting companies, such as McKinsey, Boston Consulting Group (BCG) and Bain & Company (often referred to as the "Big Three" strategy firms) and PwC, Deloitte, KPMG and EY (the "Big Four" accountancies), are hired by governments, businesses and other organizations to perform different types of tasks on their behalf. When consultancies are hired by businesses, the tasks they are given sometimes relate to corporate strategy, sometimes to the management and execution of a specific project and sometimes to a particular capacity such as IT or financial planning. Governments often contract consultancies to help deliver critical functions, from the development of climate adaptation strategies to the rollout of vaccination programs and the commissioning of welfare services.

Today, the size of the consulting industry and the contracts it receives have become eye-wateringly large. Their growth shows no sign of slowing down. In 2021, estimates of the global consulting services market ranged from between almost $700 billion to over $900 billion-though these figures do not give the full picture of consultancies' activity.

In every room

The omnipresence of consultants across the economy is striking. Indeed, during the first two years of the COVID-19 pandemic (2020-21), governments spent unprecedented figures on contracts with the big consultancies. By July 2020, McKinsey had already secured over $100 million from the federal government in the United States for pandemic-related tasks. In the United Kingdom, Deloitte received at least $372.9 million from the central government in 2021. One estimate suggests that in the UK over $3.34 billion worth of consultancy contracts were awarded by public bodies in 2021. In Italy, McKinsey was contracted to help organize the country's $191.5 billion share of the EU pandemic recovery fund. Consultants have also been at the highest tables of decision-making during many of the past decade's global economic upheavals, from the eurozone debt crisis to the recovery of Puerto Rico in the wake of Hurricane Maria. During that time, the Big Three and the Big Four have also been hired to help design smart cities, develop national net zero carbon strategies, propose education reforms, counsel armies, manage the construction of hospitals, draft medical ethics codes, write tax legislation, oversee the privatization of state-owned enterprises, manage mergers between pharmaceutical companies and govern the digital infrastructure of countless organizations. Consulting contracts span value chains and sectors, across countries and continents, affecting all levels of society.

Does any of this matter? Should we be worried about it? After all, aren't they just helping to make their clients more efficient, to do things the clients can't? This book shows why the growth in consulting contracts, the business model of big consultancies, the underlying conflicts of interest and the lack of transparency matter hugely. The consulting industry today is not merely a helping hand; its advice and actions are not purely technical and neutral, facilitating a more effective functioning of society and reducing the "transaction costs" of clients. It enables the actualization of a particular view of the economy that has created dysfunctions in government and business around the world.

The confidence tricks-or "cons"-of late-nineteenth-century America's Gilded Age used offers of proprietary information, awe-inspiring technology and linguistic tricks as a means for criminal acts of theft and illegal forms of wealth extraction. What we call the Big Con is not about criminal activity. It describes the confidence trick the consulting industry performs in contracts with hollowed-out and timid governments and shareholder value-maximizing firms. These contracts enable the consulting industry to earn incomes that far exceed the actual value it provides-a form of "economic rents," or "income earned in excess of the reward corresponding to the contribution of a factor of production to value creation." These rents are not necessarily derived from the ownership of scarce valuable knowledge assets, but from the ability to create an impression of value. Consulting practices and the immense resources and networks of big consultancies help to instill confidence in the value of a consultancy and the consulting profession.

While consulting is an old profession, the Big Con grew from the 1980s and 1990s in the wake of reforms by both the "neoliberal" right and "Third Way" progressives-on both sides of the political spectrum. Companies were increasingly run in the short-term interests of their shareholders. Public sectors were transformed under the credo of New Public Management-a policy agenda that sought to make governments function more like businesses and diminished faith in the abilities of civil servants. These trends also meant that those working within companies and government organizations became insecure, constantly needing to justify their decisions to others-business executives to their shareholders, and civil servants to an ever skeptical populace and media, which would blame them for any failure or mistake.

Surfing capitalism's trends

The Big Con is of course not responsible for all the ills of modern capitalism, but it thrives on its dysfunctionalities-from speculative finance to the short-termist business sector and the risk-averse public sector. It has capitalized on genuine ambition among some publics, politicians and business leaders to take on challenges including the climate crisis, the pandemic and growing inequality, which are viewed as opportunities to advise organizations that must adapt. There is an entrenched and mutually reinforcing relationship between the consulting industry and today's inherited governance forms in business and government. It is successful because of the unique structural power that the big consultancies wield through extensive contracts and networks across the economy, and their historic reputation as objective brokers of expertise.

Indeed, there is a place for consultants in our economy. Consulting advice and capacity is productive when it comes from the sidelines, from capable actors with genuine knowledge that creates value. The problem is not the act of consulting or the intentions of consultants, who often hope to effect change through their roles, but the ever expanding consulting industry moves from the sidelines to the center. It feeds off the weaknesses in our economies, hollowing out clients in the process, rather than...

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Verlag
Penguin Press
Erscheinungsdatum
2023
Sprache
Englisch
ISBN 10 
0593492676
ISBN 13 
9780593492673
Einband
Gebundene Ausgabe
Anzahl der Seiten
338
Kontakt zum Hersteller
Nicht verfügbar
Verantwortliche Person
Buchpark GmbH
gpsr@buchpark.de

Krügerweg 1
Trebbin
Brandenburg
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Deutschland