Pete Buttigieg’s Odd Time at McKinsey

I had initially thought there wasn’t a strong reason to comment on the peculiar aspects of Democratic presidential candidate Pete Buttigieg’s short time at McKinsey. However, Buttigieg is still very much in the running. And based on what he’s said about McKinsey, there’s more than a little that doesn’t seem right.

Note I left McKinsey 20 years before Buttigieg worked there. However, I continued to get referrals from the firm for client project and had colleagues who were reasonably plugged in. Even though some things unquestionably changed since I was there (among them, a much more mercenary attitude; expanding hiring well beyond MBAs to include other educational backgrounds; changing the shape of the firm’s employment pyramid so that the odds of a new hire making director, the tenured class, were even smaller than before), other things, like how the firm managed staffing, were so well tuned that it seems unlikely they’d changed much with the passage of time.

Despite having worked there, Buttigieg does not understand what McKinsey does. The disconnect between some of Buttigieg’s statements about McKinsey and how the firm operates are striking. Are we to conclude that Buttigieg is sorely lacking in powers of observation? Or that he’s too lazy to provide a spin that would be more accurate yet send broadly the same business-positive message?

Buttigieg presents himself as having succeeded in going to McKinsey to acquire specific skills. From an interview in the Atlantic:

“Well, I chose to work in the private sector,” Buttigieg said, in response to the Obama comparison. “Most Americans work in the private sector. And I think the experience I got there served me well. If you’re going to manage the largest economy in the world, it’s probably a good idea that you’ve had a little bit of professional experience looking at a balance sheet or knowing what an income statement is. I also walked away from the private sector early in my career to take on public service, and never looked back.

If you want to look at balance sheets, Wall Street is over there.

McKinsey staffers don’t deal with balance sheets or income statements. They deal with vastly more granular internal data. And it is often operational data.

Even when it is financial data, it is typically related to customer or product or geographic unit profitability (in fact, McKinsey often gets hired to create customer or product metrics when the so-called management information systems are set up to capture the other axis only). The sort of financial data McKinsey works with almost never ties into the public financials. Lots of accounting manipulations have to happen first.

It’s one thing for Buttgieg to prattle on about balance sheets before he went to McKinsey. But afterwards? Did he manage to have no appreciation whatsoever for what the firm does?

Now there are lots of reasons to go to McKinsey. To learn to do rigorous, fact-based analysis (yes, this does happen; what is made of it is often another matter). To learn to vet information. To develop presentation skills (McKinsey is a master of show and tell). To try to help companies perform better (seldom happens but still a reasonable thing to aspire to). To enhance your market value by having the McKinsey name on your resume.

In fairness, Buttigieg did make a more defensible claim, that he got to work on “interesting problems.” But his list of assignments shows they were all so narrow that it’s not clear what he learned about commerce, as opposed to how McKinsey operates.

Buttigieg also makes this counterfactual claim in his Medium post:

Good public servants — including recent Democratic presidents — have worked in the private sector at some point in their lives.

In other words, in the world according to Buttigieg, “good public servants” must have had enough first hand experience with business to understand what businessmen want, even though they make heavy use of lobbyists, think tanks, and PR professionals to convey their pet desires to government officials and the public at large.

This also means that Buttigieg is saying that FDR, JFK,¹ Lyndon Johnson, and Bill Clinton were not good public servants, while peanut farmer Jimmy Carter, who most rate as a weak President but a phenomenal former president, had to have been better.

Buttigieg was very junior and did grunt work. Even in my day, when the firm was more genteel and the business world generally was more leisurely, being a new hire at McKinsey typically sucked. Engagement managers (staffers with 2-5 years experience) would whack up the analytical work and hand parts out to various associates, the title for new MBA hires (“analysts” who were college grads employed for two years with the expectation that they’d then go to grad school, would often perform the same type of tasks).

But if you look at the tasks that Buttigieg lists in his summary of projects, they are real cube farmer work. This comment about his first engagement is surprising:

Because this was my first client study, it largely involved on-the-job training to develop skills in the use of spreadsheets and presentation software.

Huh? This would be seen as a basic competence that new MBAs would have; in my era, there was a first year training that took place after an associate had been there for at least six months and it wasn’t about spreadsheeting but higher order skills like problem-solving and making presentations. This sounds like a remedial effort aimed at bringing up what were initially called “non traditional hires” up to the level of MBAs. That does not mean this slower start would make a difference over the course of a career. But it would mean he would likely have been assigned more even more menial tasks early on than a typical MBA.

Note that the only place where Buttigieg gives an idea of what he did was on his second study for Loblaw’s, where he did a granular analysis of pricing. In an interview with The Atlantic, Buttigieg says he had little contact with clients:

As for what the work actually was, Buttigieg said it was mostly on screens and paper. Math. Databases. PowerPoint presentations. Rarely did he interact with employees of the clients he was advising.

Again, this is a big departure from the consulting world I know. In my era, McKinsey would make a point of having consultants tasked to a client work on client premises. Why? First, to justify the bills. Second, to build relationships. McKinsey would generally push to have a “client team” of people at the client designated to work with the McKinsey team. If you were lucky, they might actually do real work, but they would at least tell you if and where data and experts at the client lived. The junior people at the client who were good enough to be put on a McKinsey project were presumably rising stars, and having the junior people on the McKinsey team get friendly with them was considered a plus….and they might even grow up together as allies of sorts.

Given the commercial logic of encouraging even newbies to have face time with the client, Buttigieg’s claim that he hardly ever saw client personnel is odd. Didn’t he at least sit in on the periodic “progress reviews”? Team members usually participated (even if they just watched) because that was how you learned to become a partner. Again, even as a wee associate, I regularly saw (and talked to!) senior client personnel, including executives.

Buttigieg is surprisingly stingy with what he did on an interesting-looking report, Unlocking Energy Efficiency in the U.S. Economy. McKinsey performed hundreds of interviews; did he conduct some? Interviews are an important fact-gathering mechanism, particularly in areas where it’s hard to get good data or you need to scope the problem before you can even determine what data matters. Even though his role on this report was limited, it would be instructive to know how he contributed.

Buttigieg presents himself as having had little to no impact. Buttigieg presents his initial work, on a cost-cutting study for Blue Cross Blue Shield, as being about “rent, travel costs, mail, and printing.” Perhaps his little corner of data crunching focused on that, but Buttigieg is being disingenuous in averting voter attention from the fact that the study was almost certainly about cutting headcount.

In my day, McKinsey only reluctantly took on what it called “activity value” or “overhead value” studies, which were its lingo for cost reduction assignments, because there was no way to make much of a dent unless you got rid of bodies. 70% of most firm’s costs are employment-related and most costs, like rent, key off headcount. In other words, those “overhead expenditures” that Buttigieg’s team was tasked to reduce included employees.

McKinsey didn’t like getting people at clients fired because it recognized it might be creating future enemies, via axed professionals who eventually landed well and would likely do what they could to prevent McKinsey from getting hired at their new home. And consultants hated those studies too. They followed a cookbook, which meant they didn’t allow the consultants to develop or show off problem-solving skills, plus it was just plain depressing to go to client when the people in the corridors correctly saw you as an executioner.²

Buttigieg is proud of the monster data-crunching pricing exercise he did on his second study for the Canadian store Loblaw’s. There’s a bizarre grandiosity in how he presented his role as a still-wet-behind-the-ears consultant in the Atlantic interview: “….brought him in to figure out how to do it in a way that would actually help the bottom line.” Structuring the analysis falls to the engagement manager. That isn’t to say Buttigieg didn’t improve considerably upon the initial ideas, but it seems wildly implausible that someone who presents himself as having to be taught spreadsheeting and doesn’t have a degree in math, engineering, hard sciences, or at least a solid knowledge of statistics, would be “brought in” as if he had pre-existing expertise.

And oddly, he never says this big exercise was valuable to the client. There are acceptable in McKinsey-speak ways of taking credit without violating the norm of giving the glory to the client.

This part from the Atlantic interview is also grandiose:

By the time of the Loblaws project, Buttigieg was becoming known within the company for being a particularly good McKinsey consultant..

This is ludicrous. He’s merely nine months into the firm and he has yet to demonstrate any client-related or project management skills. At most, Buttigieg might have gotten noticed within the Chicago and/or Toronto offices as being a good number cruncher and quantitative analyst.

Buttigieg also tries to depict his getting a foreign assignment as a badge of honor. In reality, when an office can’t staff a project from its own team (and Buttigieg was sent from the Chicago office to work on an Iraq/Afghanistan project staffed out of the Washington office), nearly all of the time, this is the project everyone else in the office turned down. Only once in a great while is an office so busy that it can’t even staff the good projects internally. I made this mistake in accepting a London project. I got to the the office in St. James and discovered that the partner to which I was now assigned was widely despised.

Mind you, Buttigieg no doubt learned a lot from this gig, even if it may not be want he wanted to learn. But getting put on it didn’t mean he was special.

Buttigieg doesn’t adequately explain the anomaly of his bugging out to work on a campaign.

How do we make sense of this?

I stepped away from the firm during the late summer and fall of 2008 to help full-time with a Democratic campaign for governor in Indiana, returning after the election.

This is sufficiently unusual that I suspect those who have taken notice of it are likely to have drawn the wrong inferences, so indulge me for a bit.

McKinsey, high-power professional firms, and most employers do not take well to employees saying they want to take a disruptive break to pursue personal interests.

McKinsey is even less good about making accommodations for women partners who have children than other top consultants; Bain by contrast has developed a reputation for being enlightened on this front, so there’s no reason to think they are habituated to being accommodating in general….particularly for someone who has only been there a bit over a year.

Keep in mind that unlike other types of professional firms, where a young hire might join a particular department, like the bankruptcy practice, and those partners could have the power to run their own business and cut “their” staffers some slack, McKinsey non-partners are in a pool and a assignment specialist (who even when not a partner has a lot of clout) negotiates with partners as to who goes on what study. Even though the partners’ interests are important, the assignment specialist also pays attention to the so-called “development needs” of the associates and managers, as well as other issues (like they were just on an out of town study in a terrible location and putting them on another might result in them quitting).

Shorter: for the purpose of keeping peace among the partners, individual partners do not get to act as godfathers with respect to associates or even engagement managers.³

So how to make sense of this? Look at the timeframe again: Late summer-fall 2008.

The only thing I can fathom is that enough McKinsey clients saw the crisis unfolding and stopped signing up for new work so as to create a lot of underutilization. The firm might have let it quietly or not so quietly be known that it would consider requests for short-term leaves of absence.

McKinsey was badly hit in the dot-bomb era and wound up reducing its staffing in North America by nearly 50% in two years. With the benefit of hindsight, the firm might have come up with other ways to reduce payroll when faced with sudden slack besides cutting hiring and getting more aggressive about pushing weak performers out the door (both of which take time to implement).

Why did Buttigieg leave? Buttigieg strongly suggests he was never serious about McKinsey, that he was there to get his ticket punched. While that may be true, the firm tries very hard to hire individuals who are very insecure and want badly to do well, including at the firm. And if you really aren’t that serious about your long-term career at the firm, it is hard to put up with the indignities of being an associate, like insecure managers wanting you to do analysis that is obviously a waste of time or who nag associates thinking that that will motivate them, or alternatively the stereotypical bad consulting gig of being on the road all the time, worse mainly in locations with not-good hotels and restaurants.⁴

When I came to McKinsey, I was ambivalent but willing to be persuaded. I wasn’t. I saw too little evidence that McKinsey actually added value, to use its pet expression. Most clients didn’t seem to get better. Now it is true they might have gotten worse without McKinsey, but that’s hard to establish.

One fellow ‘Zoid who left around when I did had these observations:

The problem with consulting is you are hired by the problem.

The most profitable clients are the most diseased.

So consulting seemed to me to be a lot like therapy, in a bad way, in that I knew too many people who were in therapy, were convinced therapy was helping, yet there wasn’t much objective evidence that their lives were getting better (they didn’t seem less anxious, or to be having more success in their relationships or with whatever their presenting problem seemed to be).⁵ At my remove, it looked as if in too many cases, the therapist had done a good job of creating patient dependence. And I saw the same phenomenon at McKinsey.

By contrast, Buttigieg is he exhibits no reservations about what McKinsey does generally, just some specific bad acts. From the Atlantic interview:

He said he’s disappointed in some of the work the company has done. “Since I’ve left,” he said, “there are at least four cases that I can think of where someone at McKinsey has done something upsetting.”

Of course, McKinsey partners have turned out to be important funding sources for Buttigieg, so he has mercenary reasons for avoiding offending members of the firm. Nevertheless, it would seem more genuine to come up with some reason why consulting wasn’t a fit for him, even if that reason wasn’t the operative truth. But Buttigieg doesn’t do genuine.

¹ I don’t consider Kennedy having worked for one month as a correspondent thanks to his father arm-twisting William Randolph Hearst as “private sector experience.” LBJ briefly taught in public schools, again not a private sector position. Clinton decided at age 16 that he wanted to be a public servant. He worked on some political campaigns and was a law professor at the University of Arkansas (public school!) before he won his first race, for governor, at the age of 32.

² McKinsey got over these touching sentiments when specialist cost cutting firms, including ones started by ex-McKinsey non-tenured partners, started coining money by taking a percentage of the savings.

³ The dynamic can change later when a consultant has worked regularly on a core client team. Then the client might actually start asking for a particular consultant to manage or lead a study. The firm views that positively since consultants that get known at a client will be contenders to take over the account later. But the earliest when clients start asking for a specific person is at the engagement manager level, when Buttigieg was a mere associate.

⁴ I was exceptionally lucky in getting way less of that than most associates did.

⁵ Admittedly New York is very competitive and few people have friends that aren’t part of their professional circle. So the therapist might have filled an important role by being a safe sounding board/sanity check.