Shortly after the collapse of Britishvolt, the late, great hope for the UK’s electric car battery industry, a curious story emerged. As it careered towards insolvency, the hapless company had reportedly been spending more money paying expensive management consultants than its own staff. Among those consultants was EY, the firm formerly known as Ernst & Young. Now, having advised the company before its collapse, EY resurfaced as Britishvolt’s administrator, charged with cleaning up the mess.
There is nothing to stop one of these firms doing this — moving from adviser to administrator. It happens all the time and some say it can actually help, since insiders know their way around a failed company’s books. But it is only the latest example of something that Mariana Mazzucato and Rosie Collington document in The Big Con: a convenient cosiness that management consultants have exploited over the decades to become one of the most profitable and influential industries.
Most books about management consultancy quickly run into one overarching difficulty: the sector is fiendishly tricky to pin down. What, after all, is a management consultant? Does one stick with the strict definition: companies such as McKinsey, Bain or Boston Consulting Group (BCG), which offer businesses and governments advice about strategy? Does one widen the definition to include accountants like EY, or even IT consultants like IBM or outsourcing experts like Serco? The wider one casts the net, the more overwhelming the size of the consulting sector.
That, however, speaks to Mazzucato and Collington’s main point. Over the decades, the consulting sector has swelled to enormous proportions, its tentacles gripping tightly on to nearly every business or government you might care to imagine.
They were there in the 1920s advising American firms on the principles of “scientific management”. They were there helping to run Hong Kong during British rule and they were sniffing around for profit opportunities after the dissolution of the Soviet Union. They were there during the pandemic, advising governments around the world, not least our own, on their testing strategies, the procurement of PPE and vaccine rollout.
It was in this latter arena that I encountered the consulting industry a couple of years ago. Having discovered that some BCG executives engaged by the government to work on its struggling test and trace operation were charging day rates of up to £7,360 a person, I called up a few consultants, expecting them to be as shocked as I was by the scale of the fees. Instead, I heard a giggling on the other end of the line. Those day rates, I was told, were piddling compared with what BCG usually charges its private sector clients.
This gets at a point that recurs throughout The Big Con. Cut-price deals help firms secure access to the very heart of government — in the corridors of power in London, Rome or Washington. They buy influence, prestige, ubiquity and, most importantly, a foot in the door. It is, Mazzucato and Collington say, rather like a psychologist attempting not to cure their patient, but “to create a dependency and an ever greater flow of fees”.
Their point is that the great problem with the consulting business isn’t so much one of corruption, but something else: consultants have wielded their expertise to give the impression of being indispensable. Once upon a time, when a government was fighting a pandemic it would simply deploy its vast bureaucracy and medical establishment to combat the virus. Today, most governments are so pusillanimous, not to mention inexperienced and underfunded, that they are far more likely to call in the consultants.
That might be fine if doing so guaranteed results, but, citing a series of studies, the authors suggest the reality is far more hit and miss. Actually much of the time the consultants proffer the wrong advice, or fail to understand the specifics of a given company, or the needs of a government department.
Also, they are part of a revolving door that turns between public and private sectors. I was struck, as I followed this thread throughout Covid, by how many of the consultants advising senior civil servants had themselves been senior civil servants only a few years earlier.
However, the real protagonists of this book aren’t the well-paid, well-educated employees and managers of the big consultancy firms, but the rest of us: the governments that lack the self-assuredness to change economic course or launch a new plan to overhaul their welfare systems or their climate policy; the companies without the bravery to restructure themselves independently. The Big Con is really about the confidence — or lack of it — among these people, and how it has diminished over the years in the face of shareholder activism, budget cuts and concerted effort by McKinsey and Deloitte to get themselves installed on speed-dial buttons from Whitehall to the City.
The book is intended in part as a rallying call for these companies and governments, following in the footsteps of Mazzucato’s two other genre-defining books, The Entrepreneurial State and The Value of Everything. There’s more than a whiff of nostalgia for a time when governments were bold enough to resist the siren call of consultants while spending big and funding the innovations we still rely on, whether that is semiconductors or GPS. And the authors have a point. We are embarking on another Industrial Revolution and the consultants are positioning themselves as its gatekeepers, as sustainability specialists or energy transition experts.
This brings us to the biggest problem: there are scant examples of how one might do things without consultants these days. Mazzucato and Collington cite the pandemic response of the authorities in Kerala and the innovative procurement models used by the local council in Preston, but these examples are so micro that they rather prove their point. There are few alternatives to the status quo.
In much the same way as residents of big cities are never more than six feet away from a rat, few business or political decisions take place these days without the involvement, somewhere along the line, of a big or boutique consultancy. Perhaps this book is the first step towards admitting we have a problem.
The Big Con: How the Consulting Industry Weakens our Businesses, Infantilizes our Governments and Warps our Economies by Mariana Mazzucato and Rosie Collington, Allen Lane, 368pp; £25
Buy The Big Con by Mariana Mazzucato and Rosie Collington
