Self Help

The Big Con How the Consulting Industry Weakens Our Businesses, Infantilizes Our Governments, and Warps Our Economies - Mariana Mazzucato;Rosie Collington; & Rosie Collington

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Matheus Puppe

· 62 min read



  • The book aims to examine why governments outsource so much work to consulting firms and the role of consulting in the economy. It explores how this impacts organizational learning and democratic accountability.

  • The authors conducted interviews with government leaders, civil servants, executives, current/former consultants to understand the issues.

  • They draw on Mariana Mazzucato’s experience establishing the UCL Institute for Innovation and Public Purpose, which aims to strengthen the public sector.

  • Rosie Collington contributed earlier research on outsourcing critical infrastructure and skills.

  • The book seeks to outline problems with how governments and businesses are run today, while providing ideas for more capable public institutions and inclusive economies.

  • Many colleagues at IIPP helped shape the book through research seminars, workshops and conversations. Current/former consultants and contracting experts provided insights.

  • The authors thank their agent, editors at Penguin Press for guiding the project, as well as friends and family for their support during the writing process.

So in summary, the book analyzes the growth of consulting and its impacts, drawing on interviews and the authors’ experience, with support from colleagues at UCL’s IIPP institute.

  • The book examines the growing dominance and influence of large consulting firms like McKinsey, BCG and Bain (the “Big Three”) as well as the “Big Four” accountancy firms.

  • Consulting has become a $700-900 billion global industry, with these firms earning enormous contracts from governments and businesses during the pandemic in particular.

  • Consultants now have a hand in almost every sector and industry, advising on issues like climate strategies, healthcare reforms, privatizations and more.

  • However, the book argues this influence amounts to a “Big Con” - consultants expand their roles beyond technical assistance and build dependence, extracting economic rents beyond the real value they provide.

  • Consulting thrives on dysfunctionalities in modern capitalism like short-termism. Governments and businesses lack capabilities and turn to consultants out of insecurity and risk-aversion.

  • This creates a mutually reinforcing relationship where consulting feeds off weaknesses rather than helping organizations become independent.

  • The influence and lack of transparency around consulting contracts and advice is problematic but rarely scrutinized for its deeper structural impacts.

  • Consulting contracts often transfer risk from big consultancies to their clients (governments, businesses) and citizens who bear the consequences when projects fail. However, consultancies still reap large rewards.

  • Consultancies have profited from and helped spread trends like privatization, outsourcing, and austerity. They now promote sustainability initiatives but are criticized for obstructing real change and prioritizing short-term profits.

  • Relying heavily on consultants hollows out organizations and prevents internal learning and capacity building. It “infantilizes” governments and businesses who lose expertise over time.

  • Consultancies sometimes lowball initial contracts to shape decisions and gain future work, even when in-house experts would be better. They provide legitimacy for controversial choices.

  • Close ties to both government and industry raise conflicts of interest concerns.

  • The book argues over-reliance on big consultancies undermines innovation, transparency, and democratic accountability. It prevents organizations and economies from developing strengths to address challenges like climate change.

  • Moving away from these extractive business models and investing in public sector expertise instead could lead to a stronger, more purpose-driven economy and public sector. But first the problem of dependence must be acknowledged.

  • Véronique Louwagie discovered France had spent €11M on 28 contracts with consulting firms like McKinsey for COVID response, with €4M going to McKinsey alone. Consultants played a central role in decisions like vaccine rollout.

  • Consulting firms lacked public health experience but defined vaccine distribution routes and chaired meetings. France lagged in vaccinations compared to others.

  • France’s use of consultants grew, with central ministries spending €900M in 2021 on consultants, double 2018 levels. Critics called it a “scandal”.

  • Consultant use transcended political lines and predated the pandemic. Macron’s opponents weaponized it during the election.

  • Other nations also relied heavily on consultants. The US and UK spent tens of millions on McKinsey, Deloitte and others for tasks normally done in-house like procurement and management.

  • Deloitte earned $1.3M/day from UK’s Test and Trace program, which failed to control transmission. Consultants accounted for nearly half of staff despite high costs.

So in summary, France and other nations outsourced core pandemic operational and management work to expensive consulting firms like McKinsey and Deloitte, despite those firms’ lack of public health experience, resulting in costly failures to control the virus. Critics saw it as evidence of over-reliance on consultants beyond providing outside expertise.

Here’s a summary of the key insights:

  • The government had contracted an unprecedented number of consultants from various firms like Deloitte to help with operations during the pandemic response. This large scale led to inefficiencies as there were always new consultants requesting information and asking basic questions.

  • Many junior consultants brought in via subcontracts lacked specialized expertise in the relevant areas. Their job titles like “Product Owner” did not align well with the work they were actually doing.

  • While some consultants added value, the large volume and lack of clarity on roles/duties for many created disruptions to day-to-day work as staff had to respond to many basic inquiries.

  • This reliance on vast numbers of external consultants is emblematic of how governments and other organizations had come to outsource and contract out so much work to consulting firms. The pandemic response amplified pre-existing trends of extensive contracting out.

  • In summary, it became clear the unprecedented scale of consultant contracting created operational hindrances as it introduced many new players who lacked clarity on roles and specialized knowledge, disrupting core work. This issue reflects the deep consultation industry involvement across many organizations prior to the pandemic.

  • The global management consulting industry is estimated to be worth $700-900 billion annually, though exact figures are difficult to determine as many large consultancies are private companies.

  • The largest consultancies like Deloitte, PWC, EY, McKinsey, and Boston Consulting Group generate billions in annual revenue and employ hundreds of thousands of people globally.

  • However, the vast majority (96%) of consulting revenues come from just a handful of regions - North America and Europe. The top 5 countries alone generate 70% of global fees.

  • Developing markets are growing faster but still make up a small share of revenues for multinational firms. Demand is also driven by organizations like the IMF/World Bank advocating for market reforms.

  • Even within countries, data does not fully capture the scope of work, such as services outsourcing. The top 6 outsourcing consultancies in the UK have received over $26 billion in government contracts since 2015.

  • When demand declines, consultancies employ strategies like providing pro bono work to governments to maintain relevance and better position for future paid work.

  1. The head of public sector at KPMG acknowledged that they cannot afford to do pro bono work indefinitely, but can do it in the short-term as they hope to position themselves well for future paid government contracts. Firms want to get involved in major government programs from the start so they can remain involved long-term.

  2. While consulting firm revenues may seem low, the scope of their work within governments, businesses and NGOs globally is significant. They often do not just provide advice, but directly manage core functions and have their proposals adopted without question. Consulting has grown significantly in countries like India, both in the private and public sectors.

  3. The passage provides some examples of extensive consulting firm involvement in developing economic initiatives and policy in countries like Kenya, Indonesia, and others. However, there have been increasing criticisms of governments’ reliance on large consulting firms and questions around whether they truly deliver value through their contracts. Several governments have started inquiring into consulting contracts and their outcomes.

  • Consultants have long advised rulers and governments, but modern management consulting emerged in the late 19th/early 20th centuries as industries grew more complex.

  • Engineering consultants first appeared in the 1870s, hired by companies like GE and Standard Oil to help control innovation. This marked the beginnings of consulting as a formal profession.

  • Frederick Taylor’s 1911 work on “scientific management” significantly influenced consulting. He advocated breaking work into efficient tasks and selecting optimal workers, influencing many manufacturing firms and consultants.

  • Cost accounting methods developed in the 1920s, establishing consulting firms like McKinsey. They analyzed businesses’ costs and processes to improve efficiency.

  • Post-WWII, consultants advised European/North American governments building welfare programs. They provided expertise as capabilities were lacking internally.

  • From the late 1970s on, privatization policies transformed societies and corporate structures. Consultants took on larger roles in politics, business, and public service delivery like the UK’s NHS.

  • Their role shifted from providing expertise to outsourcing management due to downsizing. Critics argue this undermined organizations’ democratic goals and internal capabilities.

So in summary, management consulting originated in the late 19th century and was shaped by industrialization, scientific management theory, and later played an active role in privatization and shaping governance.

  • In the early 20th century, management consulting firms like Taylorism promoted increasing productivity by treating workers as resources and implementing top-down restructuring of firms.

  • In the 1970s, Boston Consulting Group popularized the Growth Share Matrix tool for analyzing a company’s business units. It categorized units based on market share and growth to guide investment decisions.

  • The rise of management consulting in the US was accelerated by the 1930s Glass-Steagall Act, which barred banks from providing consulting services. This created opportunities for specialist consulting firms.

  • McKinsey & Co. grew by advising struggling firms during the Great Depression, like recommending major layoffs for Marshall Field department stores to cut costs.

  • Post-war, consulting expanded as government agencies and the military contracted firms for defense, technology procurement, and restructuring for wartime/peacetime production. NASA also hired McKinsey as external advisers during its establishment for space programs.

  • In the post-WW2 period, management consultants took on more contracts with the U.S. federal government and other public sector bodies to help achieve ambitious goals and improve administration. This increased the adoption of business practices in government.

  • Consulting firms also advised on developing economies in Europe as American management ideas spread. The Marshall Plan facilitated the expansion of U.S. consulting firms.

  • Accounting firms like Arthur Andersen began offering IT consulting in the 1950s and grew through mergers. By the late 20th century, a handful of large accountancies dominated the market.

  • Governments historically maintained their own IT capabilities, but increasingly turned to consultants for advice and implementation as private sector technologies proved effective. This contributed to states losing their in-house IT skills over time.

  • The rise of neoliberalism in the 1980s under Thatcher and Reagan created unprecedented opportunities for consultancies through privatization, deregulation, and public sector reforms that emphasized the private sector. This transformed the nature and scale of the consulting industry.

Neoliberalism advocates reducing the state’s role in the economy and increasing reliance on private market actors and competition. This approach was adopted in the UK under Thatcher and in the US under Reagan in the 1970s-80s.

While public spending was not significantly reduced, state policies reoriented toward privatization, deregulation, and outsourcing public services. This created vast new opportunities for management consulting firms to advise on privatizing state assets, introducing competition in public sectors, and managing newly privatized companies.

Consulting spending by governments exploded during this period as they lacked expertise and staff to direct major reforms. Consultants helped shape and implement privatization/outsourcing policies that also generated lucrative new advisory work for them.

So while neoliberalism aimed to shrink the state, it actually redistributed and expanded state spending on private consulting to implement reforms that transferred services to market actors, growing the consulting industry’s role and revenues immensely in both private and public sectors globally.

  • In the late 20th century, governments increasingly adopted policies of New Public Management (NPM) which sought to make public sector practices more “business-like” by introducing metrics, performance targets, etc. from the private sector.

  • Management consultants played a key role in advising on and implementing these NPM reforms, as governments contracted them due to their perceived expertise in business practices.

  • By the 1990s, consultants had significant influence over public administrations in many countries, with some criticizing the growing “consultocracy”. Consultants also began taking on outsourced management roles within government.

  • In the 1980s, developing countries faced debt crises and were forced to adopt IMF/World Bank structural adjustment programs including privatization. Consultants helped implement these neoliberal reforms globally.

  • Privatization programs in countries like Mexico, Nigeria, and Hong Kong extensively involved international consulting firms. The collapse of the Soviet Union also opened new markets for consultants to advise on transitions to capitalism and privatization.

So in summary, management consulting grew tremendously in influence and role during this period as advisers and implementers of public sector reforms and economic liberalization programs globally, both in the developed and developing world.

  • As many domestic firms were acquired by large foreign entities in the 1990s and 2000s, it created opportunities for management consulting firms like Bain, BCG, McKinsey, etc. to advise on issues like restructuring, HR, technology, and operations.

  • China’s experience with consulting firms closely tracked the country’s economic liberalization. Western firms established local offices in China in the 1980s and provided initial low-cost or pro bono services to gain market share as business practices modernized.

  • As foreign investment increased in China, opportunities grew for consulting firms, though some projects like McKinsey’s work with Start Computer Group faced criticism for not understanding the local context.

  • Firms helped shape Chinese state-owned enterprises to make them more attractive investment targets and appear modernized.

  • By the late 1990s, most countries had been touched by consulting in some way due to global economic trends, though national differences affected demand and some markets like South Korea saw limited influence of Western firms over time.

  • The Enron scandal in 2001 highlighted how integrated and influential the largest accounting/consulting firms had become, relying more on lucrative consulting revenues than auditing, and risking conflicts of interest. It ultimately brought down Arthur Andersen and prompted regulation.

  • The launch of the website on October 1, 2013, which was meant to allow Americans to purchase healthcare plans under the Affordable Care Act (Obamacare), was a failure. The site crashed due to high traffic and very few people were able to sign up on the first day.

  • The failure was a major embarrassment for the Obama administration and their landmark healthcare reform legislation. Republicans called for scrapping Obamacare altogether due to the tech issues.

  • The federal agency in charge, CMS, was criticized for poor project planning, lack of oversight, inadequate testing, and improperly managing contractors involved in building the site.

  • Dozens of contractors had been brought in by CMS to help deliver core parts of Obamacare, including However, the agency failed to properly oversee their work and ensure the site was ready for launch.

  • The website issues overshadowed the policy goals of Obamacare and expanding healthcare access. It took months to fix the problems with and restore public confidence in the reform.

  • The development of involved contracting out key parts of the project to private companies, making outsourcing a central strategy. Over 55 companies worked directly on it.

  • Large contracts were awarded to companies like Booz Allen Hamilton and HP Enterprise Services for tasks like planning, procurement, implementation, integration, evaluation and improvement of

  • CGI Group, a large IT consulting firm, received over $200 million in contracts to manage the technical build and procurement process. It eventually cost $28 million more than its original contracts.

  • CGI Group failed to communicate problems, adequately staff up as the project changed, and its work had many coding defects. However, responsibility was ultimately placed on the government agency CMS for management failures.

  • Outsourcing core government functions to contractors through large, complex contracts exacerbated risks to the project. CGI Group’s “cost plus” contract structure incentivized extra billing rather than quality work.

  • reflected the broader trend of governments outsourcing and hiring consultancies not just to advise but essentially “do government.”

  • During the Clinton campaign in 1992, disillusionment with government was high due to anti-government rhetoric of the 1980s. Clinton aimed to articulate an alternative vision to distinguish Democrats.

  • Clinton was influenced by the book “Reinventing Government” which proposed reforms adopted by the National Performance Review. The book argued for a larger role for government but also greater deregulation, decentralization, and use of market mechanisms/competition.

  • This “Third Way” approach sought a middle ground between the state and the market. It emphasized government meeting public needs without directly providing services itself. Consultants like Anthony Giddens promoted this approach.

  • Consulting firms played a key role in shaping and spreading Third Way policies. They marketed their services based on reinventing government concepts.

  • Under Third Way governments, new public-private partnership models emerged, like PFI contracts in the UK. These required larger, longer-term contracts between government and private companies. Consulting firms advised both governments and private sector clients on these new models.

  • Public sector contracts aggregated multiple services within single deals to streamline procurement and reduce costs, encouraged by management consultants.

  • “Prime contracting” involved contracting a single company to manage subcontracting of various services. Consultancies were often prime contractors themselves.

  • Digitalization and “e-government” reforms in the 2000s entailed outsourcing IT systems and infrastructure to private contractors, encouraged by consulting firms.

  • Consulting firms advised governments to outsource IT and digital projects, securing large contracts themselves. IT infrastructure sometimes fell under private finance initiative (PFI) deals in countries like the UK and Australia.

  • Major consulting firms like IBM, Accenture, and PwC secured prime contracting roles on large UK government IT projects handling sensitive areas like benefits and defense. Outsourcing IT became very lucrative for the consulting industry.

  • The terrorist attacks of 9/11 led to increased contracting across the US government civilian and defense agencies to support national security programs. This created opportunities for IT consulting firms to help build digital security infrastructure.

  • Edward Snowden’s NSA leaks in 2013 revealed extensive US government surveillance programs and the role of private contractors like Booz Allen Hamilton in supporting these secret operations. This showed the close collaboration between government intelligence agencies and private companies.

  • In the late 2000s, large outsourcing firms like Serco, Atos and Sodexo emerged to specialize in managing aggregated public sector contracts. Consulting firms provided them advice on winning bids and managing infrastructure investments.

  • The 2008 financial crisis occurred due to risky lending practices and unregulated derivative trading. Big Four accounting firms had audited many of the banks that later failed but did not prevent the crisis. Governments intervened massively to stabilize economies.

  • Austerity policies were adopted in response and consulting revenues initially declined. However, opportunities arose for advising European governments and banks on debt issues, as consultants helped the Troika determine bailout amounts.

  • Major consulting firms like Oliver Wyman, Deloitte, Boston Consulting Group, and McKinsey advised European governments during the debt crisis and recession. They urged austerity measures like public sector cuts and privatization.

  • Political leaders like Obama, Rudd, and Cameron criticized over-reliance on consultants. However, consultant spending remained high and outsourcing of public services to firms like Serco, G4S, and Capita greatly increased under austerity policies.

  • Outsourcing firms took on larger roles running prisons, hospitals, schools and other services. However, they faced many scandals and failures, like Serco’s improper sterilization leading to delayed medical treatments in Australia and filthy conditions at a migrant detention center. Their expansion raised questions about accountability and capabilities.

  • While direct consultant spending declined in some areas, broader reforms pushed responsibilities to local governments and health bodies, increasing consultant use. Consultants also maintained influence by offering work at reduced rates. Their advice during the crisis emphasized cuts rather than alternatives to austerity.

  • Serco, a large government contractor in the UK, faced significant scrutiny and fines in the early 2010s for overcharging on contracts to electronically monitor prisoners and failing to provide adequate doctors for an NHS contract.

  • It was also involved in issues with the rollout of the Obamacare healthcare website. However, the company remained afloat through this period of trouble.

  • In 2013, an investigation found Serco had 23 subsidiaries in tax havens, likely to reduce its tax burden. Leaked documents later also showed the company wanted to make greater use of tax loopholes.

  • In 2018, another major UK government contractor, Carillion, collapsed due to taking on too many low-margin contracts and relying on future earnings to finance its operations, leaving it vulnerable to problems. Its failure left thousands of employees without work or pay.

  • The company had significant debts and pension deficits. Its auditors, KPMG, were later fined for failures in auditing Carillion and accused of missing warning signs of insolvency. The other big audit firms also had lucrative consulting contracts with Carillion.

  • The collapse shed light on risks of the outsourcing model and companies relying on future earnings from long-term government contracts to maintain fragile financial positions.

Here are the key points:

  • Management consultants traditionally were expected to identify improvements by leveraging their expertise, frameworks, and knowledge from other organizations. The goal was helping clients improve processes and achieve objectives like increased profits.

  • However, David’s experience showed consulting engagements were sometimes more about assigning blame if targets weren’t hit or responding to pressures from shareholders for cost cuts and margins.

  • While consultants claimed their methods were superior, their proposals often could not demonstrably add value or even be implemented. In one case, their proposal was flawed because they failed to consult factory employees and understand the actual operations.

  • The dominant view is that consultancies serve a “functional” purpose by transferring knowledge and expertise to help clients. But David’s experience suggests the real value provided by consultants is unclear and questionable, even when their proposals prove flawed or unimplementable.

So in summary, while traditionally viewed as experts helping clients, David saw consulting sometimes used more for political purposes like assigning blame, and the actual value added by their proposals and methods was questionable or unclear based on his experiences.

  • The ic sector includes private companies, nonprofit organizations, and philanthropic groups that operate independently from government.

  • The private sector includes for-profit businesses.

  • The third sector refers to nonprofit organizations that operate separately from government and business to address social issues. This includes charities, nongovernmental organizations, community groups, etc.

  • Critics argue that management consultancies, private contractors, and third sector organizations do not always create as much value for clients/society as the money they receive in fees and revenues would suggest.

  • The “additional value” they help to create through their work is often equal to or less than the “value they extract” in the form of profits, fees, salaries, etc. In other words, some of their revenue comes from “economic rents” rather than true value creation.

  • However, the relationship between clients/funders and these organizations is complex. Clients are not always passive victims and have their own pressures and constraints. And these sectors possess structural power and influence over perceptions that allow them to appear more valuable than they actually are.

  • The consulting industry attracts top graduates from elite universities as consultants see it as a prestigious career. McKinsey in particular recruited heavily from top MBA programs in the 1960s.

  • However, more recently data suggests consultancies are recruiting from a more diverse range of universities as the industry expands rapidly and competes for talent with other growing sectors. Firms need to recruit more people to meet growing demand.

  • Recruiting from top schools helps consulting firms project an image of competence and legitimacy to clients. Elite degrees impress clients and help win contracts.

  • The “up or out” promotion structure ensures consultants work hard to advance or leave. This also creates a “diaspora” of alumni in client organizations that consulting firms can leverage for future business. Many ex-consultants rise to senior roles and become contacts for their former firms.

  • Firms actively cultivate alumni networks through events and other initiatives to maintain relationships with former employees, expanding their business development opportunities. Strong alumni networks are an asset for securing client contracts and referrals.

The consulting industry claims that their graduate training programs help develop valuable skills and provide opportunities to gain expertise. However, some points of criticism are raised:

  • While general project management and presentation skills are taught, consultants often lack deep technical knowledge of the clients’ industries. Developing expertise takes years of experience, not brief rotations.

  • Consultants have access to numerous past client cases and project histories, but the information contained is often shallow. It does not equate to the deep tacit knowledge that industry insiders gain over long careers.

  • Training is focused more on instilling confidence in consulting practices and creating an impression of value, rather than developing deep contextualized expertise. The aim seems to be willfully duping clients rather than benefiting them.

  • Many graduates are disillusioned upon realizing they are not gaining meaningful work or technical knowledge as promised. The work lacks substance and expertise, focusing more on superficial solutions and skills.

So while graduate programs teach general business skills, they may not deliver on promises of gaining deep expertise or making a meaningful impact. The aim appears to be impressing clients with an air of competence rather than benefiting them.

  • Consulting firms establish quasi-academic institutions like universities and research centers to gain legitimacy and present themselves as experts. Examples include Deloitte University, Capgemini University, and McKinsey Global Institute.

  • These institutions provide training for consultants but are designed to look like academic campuses or think tanks. They employ academics and publish research reports and journals.

  • This helps consultants convince clients that they have expertise and specialized knowledge, even if that knowledge is often superficial and recycled between projects. Consultants rely on these quasi-academic institutions to boost their credibility and credentials.

  • Case studies of past projects are also used to market firms’ expertise, but copying and pasting standardized solutions undermines truly tailored advice for clients. Recruiting focuses on confidently “solving” mock cases rather than demonstrated sector expertise.

  • Overall, the article argues that despite quasi-academic approaches, the knowledge consulting firms provide tends to be generalized rather than specialized due to business pressures of quickly completing projects and winning new contracts. Their expertise is more perceived than real.

  • Large management consultancies like Deloitte, McKinsey, and PwC have established research centers and institutes that produce reports and insights on various business and policy topics. These organizations fund research and publications that promote the consultancies’ expertise in different areas.

  • Consultants from these firms have also written many popular business books that describe frameworks and approaches developed internally. One influential example is In Search of Excellence, which outlined McKinsey’s 7-S framework despite criticism of lacking academic rigor.

  • Consultancy reports and publications are targeted marketing that increase demand for their advisory services by positioning them as thought leaders. While some knowledge is valuable, the analysis should not be taken at face value given their commercial interests.

  • Consultancies are sometimes contracted not just due to their expertise, but to “rubber stamp” decisions that clients have already made internally in order to gain approval and influence stakeholders. Their reputations lend credibility to clients’ proposals.

  • Large consultancies viewed Brexit as a major business opportunity due to the unprecedented complexity and uncertainty it created. They invested heavily in Brexit advisory services to assist both government and businesses through the withdrawal process.

  • Large consulting firms like Boston Consulting Group, Deloitte, and PwC actively marketed their Brexit advisory services to private sector clients in industries expected to be impacted like pharmaceuticals, aerospace, and financial services.

  • They developed tools and resources like a “Brexit Customs and Trade Impact Assessment” tool to model supply chain impacts and dedicated digital platforms for clients.

  • These efforts proved lucrative as the UK consulting market grew significantly in 2016-2017 as companies sought Brexit planning help.

  • In the public sector, Brexit-related consulting contracts from government departments soared from 2017-2020, with areas like immigration and border preparation.

  • Six major consultancies (Deloitte, PA Consulting, PwC, EY, Bain & Company and Boston Consulting Group) secured 96% of government contracts.

  • However, the risks of flawed advice or failed outcomes from consulting work were borne mostly by clients/the public, not the consulting firms due to the ambiguous nature of advice work and difficulty attributing blame when things go wrong.

  • Consulting firms face a conflict between acting in the client’s best interest versus ensuring profitable contracts that drive growth. They typically bear little risk from contract failures, creating a “moral hazard.”

  • Most large consultancies originated as partnerships, where partners personally assumed liability for losses. This incentivized careful advice.

  • Over time, rules relaxed and many consultancies became limited liability partnerships or subsidiaries. Partners no longer bear full risks of failures.

  • Publicly traded consultancies tie executive pay to stock growth, prioritizing shareholder value. But employees, clients, and citizens arguably assume greater risks from consulting failures than shareholders do from losses.

  • The COVID-19 pandemic highlighted this, as consultancies like Serco profited hugely from government contracts while lower-paid workers and the public bore health and economic risks of failures in contract delivery. Shareholders faced little risk despite outsized rewards.

  • Sweden was one of the first countries to introduce a national pension scheme in 1913, when average life expectancy was much lower.

  • As Sweden developed its welfare state throughout the 20th century, the number of older people requiring pensions and care remained low.

  • Now, many more people are living longer, with estimates that half of those born in advanced economies could live to 100.

  • This longevity poses challenges for welfare state models that provide care for the elderly, as demand increases for pensions, health, and social care as the population ages.

  • However, the resources to support these growing needs have not kept pace in most countries, putting pressure on the welfare state model.

  • One key statistic cited is the old-age dependency ratio, which measures the number of retirees compared to the working-age population paying taxes, and this is rising rapidly in many nations.

So in summary, much longer lifespans are a success for medicine but challenging existing welfare systems as the aging population requires more support that current funding levels may not be able to sustain. This is putting pressure on models that rely on state-provided pensions and elderly care.

  • The New Karolinska Solna (NKS) hospital in Stockholm, Sweden was envisioned as a radically innovative facility to meet future healthcare demands. However, its development through a public-private partnership (PPP) led to unprecedented cost overruns.

  • The PPP model was controversial from the start due to risks of high long-term costs seen in other countries. However, consultancies recommended it and the project proceeded with just one bidder.

  • Costs have skyrocketed far beyond initial budgets, with total spending projected to reach over 5 times the original budget. Upfront “innovation” payments alone are €30 million per year with unclear benefits.

  • In addition to construction overruns, management consulting fees including for controversially applying “value-based healthcare” concepts drove costs higher. Over 80% of the contract value went to subcontractors rather than the two main partners.

  • While aiming to be cutting-edge, the project’s spiraling financial costs and lack of evidence for some applied concepts have drawn extensive criticism and investigations into the failed PPP model used.

Here are the key points about how organizations learn from the passage:

  • Learning is an incremental and collective process within an organization, not a transaction. It builds on existing knowledge and resources within the organization.

  • Organizations accumulate tacit knowledge and expertise over time from employees, which constitutes an important resource for learning and adapting to new challenges. This “institutional memory” and tacit knowledge is often overlooked when relying heavily on consultants.

  • Interactions with other actors in society like other organizations are also important for an organization’s learning.

  • Relying too much on consultants can prevent the contracting organization from developing their own skills and learning internally over time. Consultants may not effectively share all the knowledge they develop.

  • Previous experiences handling challenges provide a foundation of learning and resources that help organizations respond to future crises, as seen in examples of governments responding to COVID-19 who had dealt with prior epidemics. This institutional memory is important for adaptive capabilities.

So in summary, the key takeaway is that effective organizational learning is an internal and incremental process, not a transaction, and relying too heavily on consultants can undermine this learning and the development of an organization’s own expertise and adaptive capabilities.

  • Contracting out government work to private organizations like management consultancies can erode the in-house knowledge and capabilities of the public sector over time. As agencies do less work themselves, they lose the expertise to perform those functions.

  • This “hollowing out” of capacities has cumulative long-term effects. If government work is continually outsourced, agencies are unable to develop deeper institutional knowledge and memory.

  • Even attempting to absorb knowledge from contractors is difficult without strong internal management abilities, as the concept of “absorptive capacity” describes. Outsourcing risks the public sector quickly forgetting external knowledge.

  • Losing IT capabilities and data infrastructure to private contractors, as Denmark did through extensive outsourcing reforms, constrained governments’ ability to implement political priorities and changes in a responsive manner. Agencies became dependent on external vendors.

  • Outsourcing regulatory development to the private sector actors being regulated risks “capture” and limits the state’s ability to effectively govern markets with independent analysis and expertise. Hollowing out of public sector skills exacerbates this challenge.

  • Privatization and outsourcing of core public functions undermines governments’ ability to effectively regulate and oversee those functions. It leads to a loss of in-house expertise and technical skills over time.

  • This was seen in the UK after major privatization, when the government lacked contracting skills to run a rail franchise competition. Consultants had essentially taken over those functions.

  • Denmark similarly lost internal digital capabilities and was unable to properly oversee a large AI project with IBM that ultimately failed.

  • During COVID, governments’ weak contracting capacity was exposed as they scrambled to procure PPE and tests. There were numerous allegations of “cronyism” and corruption in UK contracts awarded through VIP lanes.

  • While political decisions played a role, the hollowing out of internal government contracting expertise made the UK susceptible to influence and unable to ensure transparency. Prior capacity could have prevented favors to political allies.

  • Weakened state capacity has political implications, as it allows anti-establishment sentiments to rise and status quo institutions to be challenged, for better or worse. Outsourcing reforms undermine the state’s ability to constrain politicians’ corrupt choices.

  • Right-wing politicians have capitalized on feelings of political alienation, while the loss of expertise in government has also undermined public institutions. Outsourcing to consultancies risks further limiting government capabilities and fueling disillusionment.

  • In businesses, outsourcing can erode organizational learning and development of new technologies. Consultancies’ introduction of new frameworks and restructuring recommendations can disrupt learning by overturning existing structures before capabilities are fully developed.

  • Restructuring often involves widespread job cuts, which research shows seriously damages an organization’s learning capacity. Maximizing shareholder value also undermines innovation by constraining investment to increase short-term payouts.

  • The pharmaceutical industry illustrates these issues, with companies reducing R&D to increase profits. Valeant Pharmaceuticals dramatically slashed R&D on McKinsey’s advice, instead acquiring companies and raising drug prices, laying off over half the workforce of some acquisitions. This focused on returns over innovation.

  • Hurricane Maria in 2017 caused immense devastation in Puerto Rico, with the official death toll recorded as 2,975 but some estimates as high as 4,645. It overwhelmed hospitals and infrastructure.

  • Puerto Rico’s development has lagged behind the U.S. mainland for decades since becoming a U.S. territory in 1917. Post-WWII “Operation Bootstrap” aimed to transform it from an agricultural to industrial economy but this transition was not successful.

  • By the 1970s, Puerto Rico faced economic challenges and took on debt. In the years before Maria, McKinsey advised slashing government spending, retrenching welfare services, and privatizing public enterprises. This likely contributed to Puerto Rico’s weakened infrastructure and hospitals being overwhelmed during the hurricane.

  • The severity of the damage from Maria was exacerbated by Puerto Rico’s longstanding struggles with development and the weakening of social and economic institutions in the years just before the hurricane, due in part to McKinsey’s austerity advice.

  • Puerto Rico faced an economic crisis in the 2000s as tax breaks for companies expired and they left the island, shrinking the tax base. The government borrowed heavily to fund services like healthcare.

  • By 2014, Puerto Rico’s debts were downgraded to “junk” status, meaning the bonds were worthless. The territory eventually defaulted on its debts.

  • Congress passed PROMESA in 2016 to oversee Puerto Rico’s bankruptcy process and economic restructuring. But the oversight board was criticized for treating Puerto Rico like a colony.

  • McKinsey was hired as a strategic consultant to advise on restructuring. It recommended privatization measures and austerity reforms that were unpopular locally.

  • Critics argued McKinsey was used to avoid blame for unpopular decisions. It was later discovered McKinsey owned Puerto Rican bonds through an investment fund, creating a potential conflict of interest.

  • While McKinsey maintained separate operations, the SEC later fined an affiliate for improperly using insider information from client work for investments. This confirmed concerns about McKinsey’s dual role in advising on and profiting from Puerto Rico’s debt crisis.

Here are the key points about potential costs and conflicts of interest when relying on consulting firms to deliver core government functions:

  • Consulting firms like McKinsey have unprecedented access and influence over important economic policy decisions when advising governments. This can bias policies toward the interests of the firms’ private sector clients rather than the public good.

  • Governments have outsourced significant decision-making to consultants with little transparency or accountability. Consultants have an incentive to recommend solutions that appease existing or future clients in industry.

  • Consultants working for both governments and private sector markets creates conflicts of interest. Confidential government knowledge may be used to benefit business clients rather than the public.

  • Firms like the Big Four have drafted tax legislation while simultaneously advising clients on exploiting loopholes, undermining democratic processes and standards.

  • Over-reliance on for-profit consultants for policymaking narrowly constrains outcomes to market-based solutions rather than considering alternatives like regulating industry. There is a lack of diverse, “disinterested” viewpoints focused solely on the public interest.

So in summary, consulting industry influence raises important questions about conflicts of interest undermining democratic decision-making and prioritizing private sector interests over the public good. More transparency and accountability are needed.

  • Consulting firms can gain influence over policy and contracts through both directly recruiting politicians as employees and cultivating networks of former employees now working in other sectors.

  • There is evidence that politicians who hold private sector jobs, like with consulting firms, tend to ask more parliamentary questions that could benefit those private employers.

  • Consulting firms invest heavily in developing a strong organizational identity among employees that can continue influencing their thinking even after they leave the firm.

  • Former consultants may bring the management philosophies and practices they learned with them to new roles, spreading the influence of consulting firms.

  • Consulting work providing tax avoidance strategies undermines democratic tax rules aimed at fairness and redistribution. While some tax avoidance is legal, the lines are often blurred and it runs counter to the spirit of tax systems.

  • Companies increasingly view taxes as constraints on profits and seek to minimize payments through aggressive “tax strategies,” whether legal or not, while democratic institutions see taxes as important for revenue and equity.

So in summary, consulting firms wield influence through direct and indirect networks as well as philosophies that spread, while their tax avoidance work undercuts democratic tax policies and priorities around fairness.

  • Tax havens are jurisdictions that levy low taxes and offer tax benefits like deductions. Companies sometimes use them illegally, like through shell companies, or legally, like holding intellectual property in subsidiaries there.

  • Accounting consultancies in particular help facilitate corporate tax minimization, including through tax havens. Investigations have revealed their extensive presence in tax havens and role enabling capital flight.

  • In Africa, consultancies have aided capital flight by serving corrupt politicians and companies moving money overseas through tax havens. This has undermined development in countries like Angola by reducing tax revenue and public capacity.

  • Consultancies are often involved in corporate restructuring that results in job losses and cuts to workers’ conditions and pay. While intended to reduce costs, this can negatively impact employees’ well-being, employment security and bargaining power. Unions have historically organized to campaign for improved labor protections and standards of living for workers.

  • Management consultants are often contracted by companies and governments to recommend cost-cutting measures like job cuts or reducing wages and benefits. This can negatively impact workers and increase demand for public services.

  • For example, McKinsey advised the US Postal Service on measures like replacing unionized workers with non-unionized ones, until the NLRB ruled it violated agreements.

  • Consultants also advise on contract negotiations in ways that may undermine unions and collective bargaining illegally at times. An example in Canada showed consultants directly managing operations in healthcare in ways that raised safety and union issues.

  • However, the influence of consultants is often opaque to the public and politicians. They operate in the “shadow government” with little transparency on their role and impact. This challenges democracy as decisions are made without public knowledge or accountability. Greater regulation is needed to address this issue.

  • The passage discusses the important contributions of Godwin Olu Patrick Obasi, a Nigerian scientist who led the World Meteorological Organization and helped establish the Intergovernmental Panel on Climate Change (IPCC) in 1988.

  • The IPCC published influential reports in 1990 and 2018 that provided clear scientific evidence of human-caused climate change and its risks. Obasi emphasized the need for systemic changes to sustainable development.

  • The 2018 IPCC report set a deadline, stating global warming must be limited to 1.5°C by 2030 through urgent emission reductions, or climate change impacts would be catastrophic. This galvanized global climate activism.

  • Youth movements like Greta Thunberg’s called for transformative action beyond individual behaviors, showing emissions are driven by major industries. Subsequent IPCC reports confirmed the intensifying climate crisis.

  • Climate change has risen from a niche issue to a top political priority, reflecting growing public concern over the expertise and warnings from scientists like Obasi that started the IPCC decades ago.

  • Concern about climate change among the public is at unprecedented levels globally, with majorities in many countries viewing it as an emergency.

  • The climate consulting industry has grown rapidly in recent years to help governments and businesses address climate change. Major firms like BCG, McKinsey, PwC have expanded their sustainability practices.

  • In 2021 alone there were large investments by consultants to capture the growing market, like BCG partnering with COP26 and McKinsey acquiring climate consulting firm Vivid Economics.

  • The climate crisis poses long-term challenges that will require vast expertise, creating ongoing opportunities for consultants. Coordinated responses across sectors and geographies also create larger clients.

  • Consultants now prominently feature climate and sustainability in their marketing, urging “radical transformation” and portraying their services as necessary to tackle the “climate emergency.”

  • However, consultants have long assisted carbon-intensive industries in expanding. Promoting sustainability strategies was initially about reputational benefits, not fundamental change to the status quo that benefits their high-emitting clients.

  • In 1997, Dutch Shell contracted Arthur D. Little and an environmental consultancy to help develop tools and indicators to identify stakeholders, risks, and opportunities related to sustainability and reporting. However, major oil and gas companies also opposed binding measures to reduce greenhouse gas emissions.

  • Governments recognized the need for climate policies but adopted a “market-driven” approach that was resistant to systemic change and minimized government intervention. This neoliberal approach favored private decision-making.

  • Led by the US, multilateral institutions adopted this market-driven approach. The Kyoto Protocol introduced carbon trading which created a large carbon market but allowed continued emissions. The US later withdrew, citing economic concerns.

  • Governments assumed green technologies would emerge due to market demand, rather than directly fostering innovation. Progress was slower than needed.

  • Self-regulation initiatives like climate risk disclosure emerged, led by industry coalitions including some funded by fossil fuel companies. These avoided mandatory regulations.

  • The market-driven approach has not worked as emissions continue to rise despite increasing impacts. Systemic intervention is now recognized as needed, including regulation, public investment, and market policies. But some companies still resist curbing emissions.

  • Climate consulting services are in high demand as companies and governments want to reduce emissions. However, consultancies may also be hired to create an illusion of climate action rather than meaningful plans.

  • McKinsey was hired by the Australian government to develop a net zero plan by 2050 but the plan was widely criticized for not actually achieving net zero emissions. It relied heavily on uncertain future technologies and questionable offsetting methods.

  • McKinsey reports have underestimated clean energy growth and overestimated transition costs. They seem aimed at protecting carbon-intensive industries rather than meaningful emissions reduction.

  • McKinsey has many fossil fuel companies as clients, creating conflicts of interest in its climate advisory work. It has advised at least 43 of the top 100 polluters.

  • In UN climate talks, McKinsey advocated compensating large timber companies more than indigenous slash-and-burn practices, prioritizing financial costs over environmental and cultural impacts.

  • There is doubt that McKinsey and other consultancies can provide truly impartial climate advice when their fossil fuel industry ties may influence their recommendations.

  • McKinsey developed metrics for REDD+ and the UNFCCC that valued profits of logging companies more than indigenous farming practices, which did not significantly contribute to deforestation.

  • McKinsey’s clients at the time included logging companies operating in the forests being discussed, so there was a direct conflict of interest as their advice could protect client interests over more effective environmental solutions.

  • Indigenous communities affected were not McKinsey clients and lacked direct access to consultants, so their interests were not well represented in the quantitative tools developed.

  • Given these conflicts of interest, McKinsey’s advice on deforestation reduction policies cannot be considered fully impartial. They were serving both the logging companies and organizations developing the policies.

The passage discusses the role of consulting firms and the concept of “the Big Con” in addressing the climate crisis. It argues that consulting firms have played an obfuscating role by providing a “veil of commitment without the mandate for action.” While consultancies claim to help with decarbonization, internal documents from McKinsey show that a large portion of their work is actually for the world’s biggest polluters.

The passage concludes that governments need to take a leading role in shaping economies and solutions to problems like climate change. It argues governments must learn to invest internally in building capabilities rather than relying on consultants. It points to the early National Health Service in the UK as an example of a public sector organization that was able to innovate through developing its own capabilities and coordination across society, rather than outsourcing. Overall the passage is critical of the influence of consultancies and argues for stronger government leadership and internal capacity building.

Here are four proposals from the passage to limit reliance on consulting firms and foster more value-creating partnerships:

  1. Develop a new vision and narrative for the civil service that recognizes the government as a value creator in the economy, not just a market fixer. This would involve promoting risk-taking and experimentation within government.

  2. Invest in rebuilding internal capabilities within public sector organizations through training, skills development, and opportunities for staff to take on new challenges. This will help attract and retain competent individuals.

  3. Eliminate large prime contracting and reduce the scale of contracts to limit risks and costs of failure. This prevents government from becoming overly dependent on consultants.

  4. Mandate transparency around consultancies’ client interests and manage contracts internally to ensure governments can develop direct relationships with businesses and learn from experiences.

The overarching goal is to strengthen internal capacities within both public and private sectors so they can foster more value-creating partnerships on their own, rather than relying so heavily on external consulting firms. Reforms aim to make government a driver of innovation in the economy.

  • Effective communication between government departments and with citizens/businesses is important for learning and policymaking, as seen during the COVID pandemic.

  • However, outsourcing of digital infrastructure through e-government reforms has undermined this potential for learning. Governments need in-house IT expertise to manage digital resources.

  • Examples like the UK’s Government Digital Service and public labs in other countries show how governments can innovate internally.

  • Relying too much on management consultancies undermines public sector capabilities. Some governments are bringing consulting functions in-house.

  • Partnerships across different organizations can help build public sector capabilities through knowledge sharing. But current definitions of consulting are too narrow.

  • Governments should utilize knowledge from a diversity of public research institutions, not just those focused on commercialization.

  • Progressive procurement policies like in Preston, UK aim to keep wealth circulating locally through responsible community businesses.

  • For partnerships and contracts to support learning, knowledge sharing and capacity building must be explicitly embedded in evaluations from the start, not just viewed transactionally. Ongoing assessment is needed.

  • Consultancy contracts should mandate transparency around any potential conflicting interests, such as working for companies in the same industry as government clients. Disclosing client relationships is important for informed decision making.

  • The value of consultancy contracts should reflect the true economic value of the work rather than being artificially low to win future business. Pro bono work can undermine accountability.

  • Governments need to maintain internal capabilities and knowledge rather than fully outsourcing functions. Embedding learning from contracts helps build independent capacity over time.

  • Large consultancies are often influenced by client interests in ways that inhibit knowledge sharing and value creation for the contracting organization. Reforms need to address conflicts of interest directly.

  • Evaluating contracts should assess what employees learned and how that knowledge was then applied, to see if the contract created new independent local capabilities as intended.

  • Governments must “row as well as steer” - maintaining internal functions allows them to direct policy outcomes. Over-reliance on consultancies shifts power away from elected governments.

In summary, it calls for more transparency around consultancy relationships and conflicts, appropriately valued contracts, internal knowledge building, and maintaining core governmental capabilities and control over policy outcomes. The goal is empowering public sectors and enabling truly independent and democratic governance.

Here is a summary of the sources provided:

  • “Stronger and More Secure Digital Denmark: Digital Strategy 2016–2020” lays out Denmark’s digital strategy from 2016-2020 which focused on strengthening cybersecurity and increasing digitization across government services.

  • “The Digital Path to Future Welfare: EGovernment Strategy 2011–2015” was Denmark’s previous e-government strategy that aimed to digitize public services to improve welfare.

  • “1979 and All That: A 40-Year Reassessment of Margaret Thatcher’s Legacy on Her Own Terms” analyzes Thatcher’s legacy in the UK 40 years after taking office, focusing on her own stated goals and priorities.

  • Several sources discuss France hiring consulting firms like McKinsey to help with the COVID-19 pandemic response and vaccine rollout, leading to questions about their influence over policymaking.

  • Other sources examine the growing role and influence of management consulting firms in advising both private sector clients and government bodies, and the associated accountability and conflict of interest issues.

  • Sources also analyze specific privatization and outsourcing deals involving consultants that have faced criticism for waste or poor outcomes. This includes references to deals in the UK, Sweden, and Kenya.

  • Additional sources discuss the history of management consulting and New Public Management reforms promoting privatization/outsourcing, as well as concerns about “hollowing out” of public sector capacities and expertise.

  • Sources on climate change reference the history of international climate negotiations and discuss critiques of cost estimates produced by consulting firms for climate mitigation efforts.

  • Other topics covered include ESG investing, digitalization trends affecting the public sector, responses to aging populations, and theories of absorptive capacity and organizational learning.

Here is a summary of the key points from the provided sources:

  • Many sources discuss the increasing privatization and outsourcing of public services to private sector companies, especially management consulting firms, and the implications of this trend. Some argue it leads to cost savings while others warn of accountability and control issues.

  • Digital transformation and management consulting have been core parts of public sector modernization efforts in countries like Denmark and Sweden. Strategies aimed to improve efficiency and service delivery through IT projects.

  • Mechanisms like PPPs (public-private partnerships) have been promoted but criticized for lacking transparency and costing more over time compared to traditional public provision. Private financing comes with debt obligations.

  • Management consulting’s growth is traced from the 1980s onward, driven by demands for outsider expertise in restructuring, downsizing, and New Public Management ideas promoting private sector techniques. Firms play an advisory role in many projects and policy areas.

  • Sources debate the costs and benefits of outsourcing and privatizing public services, workforce “survivors” experience, and the degree to which partnerships transfer risk from government to private partners. Control, accountability and potential influence of consultants are discussed.

  • Data sources look at specific cases involving management consulting work, such as postal service privatization recommendations, ESG investing influence, projects in Africa/emerging markets, and clients in polluting industries like fossil fuel production. Potential conflicts of interest are raised.

  • Overall the sources examine the growing role of private sector players like consultants in providing public services and advice, with differing views about the impacts on traditional public sector priorities, capabilities, and accountability. Both benefits and critiques of these trends in digital/management consulting are presented.

Here are summaries of the provided articles:

  • Son (2003) examines the professional partnership model of governance in professional service firms like management consulting and argues it can still be an exemplary form of governance despite challenges.

  • Gross et al. (2004) provides an overview of the management consulting industry in Central Europe, discussing trends and opportunities.

  • Hargadon (1998) discusses how firms can act as knowledge brokers, transferring knowledge between clients, and the importance of continuous innovation.

  • Harvey (2007) provides a brief history of the rise of neoliberalism as a political ideology since the late 1970s.

  • Harvey et al. (2010) examines the concept of absorptive capacity and how organizations assimilate and apply new knowledge to improve performance.

  • Heusinkveld (2013) examines the management consulting industry as an “idea factory” that commodifies management ideas and spreads them globally.

  • Heusinkveld and Benders (2012) discuss how consultants help spread new organizational concepts and influence organizations.

  • The other summaries discuss a range of topics including climate change, gender and technology, privatization, public sector management reforms, outsourcing, corporate governance, and the role of consultants in policymaking.

Here is a summary of the references provided on the topic of nrosian-learning-confronts-the-neoclassical-fallacy:

The references deal with the rise of management consulting firms and their influence on public policy and governance. Several papers examine how consulting firms like McKinsey have helped spread neoliberal ideology and encourage privatization, outsourcing of public services, and financialization.

Specific topics covered include:

  • The role of consultants in promoting “shareholder value” and maximizing profits over other stakeholder interests.

  • How consulting firms have advised on large IT project failures like

  • Financialization of industries like pharmaceuticals and how it impacts innovation.

  • Critics who argue consultants push standardized solutions and a business-like approach that is not always appropriate for government.

  • Historical analysis of consulting’s increasing influence in both the private and public sectors since the 20th century.

  • Cross-country comparisons of outsourcing trends and the impacts on employment conditions.

  • The spread of new public management ideas and market-based reforms due to consultant influence.

So in summary, the references critically examine the role of major consulting firms in advancing neoliberal policies and ideologies through their public and private sector client work. This is positioned against claims of their neutral, expert advice.

Here are summaries of some of the key papers:

  • Murphy and Stausholm (2017) investigate the opacity and lack of transparency surrounding the “Big Four” accounting firms (Deloitte, PwC, EY, KPMG). They argue these firms have become too big and politically influential.

  • National Audit Office (2019) report examines UK government departments’ increasing use of consultants to support Brexit preparations, finding a lack of monitoring and oversight of contracts.

  • National Audit Office (2015) report assesses the choice between public and private finance for capital investment projects. It notes private finance can be more expensive depending on project circumstances.

  • Saint-Martin (2004) book examines how management consulting fueled public sector reforms promoting the “new managerialist” state with business-like practices. It adopts an historical-institutionalist perspective.

  • Sturdy et al. (2009) book provides a comprehensive look at management consulting, exploring the boundaries and nature of consulting knowledge and practice. It draws on numerous case studies.

  • Seabrooke and Sending (2020) paper analyzes how contracting and consultants shape development practices at intergovernmental organizations like the World Bank, promoting managerialism.

  • Shaoul et al. (2007, 2008) papers explore the role of private finance in UK public-private partnership hospitals, finding involvement of financial advisors can undermine public accountability.

Here are the key points from the summaries:

  • Management consulting is a large and growing global industry, with the top consulting firms generating billions in annual revenues from both private and public sector clients.

  • Consulting firms have played a major role in government COVID-19 pandemic responses, advising on procurement, logistics, and strategy. This has generated significant revenues for the top consultants but also criticisms of their influence and the value delivered for high fees.

  • Consultants promote business models and approaches that prioritize efficiency, privatization, and commercialization. This aligns with neoliberal ideology but is not always optimal for addressing complex policy challenges or public needs.

  • Consulting recommendations are sometimes implemented without consideration of wider impacts or public accountability mechanisms. Consultants also tend to propose ongoing advisory relationships that maintain revenue streams.

  • Government reliance on consultants with close private sector ties raises questions about conflicts of interest and outsourcing of inherently governmental functions. There are calls for greater transparency and oversight of consultant contracts and deliverables.

  • Management theories and approaches are strongly shaped by major consulting firms as they diffuse ideas internationally. This has significant influence on both private and public management practices globally.

Here is a summary of the report:

The public sector consulting market in the UK grew significantly in 2021, with total spending reaching over £2 billion according to research firm Tussell. This represented an increase of over 12% compared to the previous year.

Much of the growth was driven by increased demand for consultancy services during the COVID-19 pandemic, as public sector organizations looked to consultants for help with issues like vaccine rollout, test and trace programs, and economic recovery planning. Spending on management consulting grew the most, increasing by over 30% year-over-year.

Large consulting firms like Deloitte, EY, KPMG and PwC benefited significantly from the rise in public sector spending. They held a collective market share of around 45% based on direct contract value. Other major beneficiaries included Accenture, IBM, PA Consulting Group and BCG Digital Ventures.

The increased reliance on external consultants during the pandemic raised questions about value for money and the long-term impact on the capability of the public sector. However, officials argued consultants provided surge support that allowed the urgent deployment of resources to fight COVID-19.

Going forward, it remains to be seen if public sector consultancy spending remains elevated or retreats from the highs seen during the crisis period. Continued digital transformation initiatives and ongoing programs around Brexit and economic recovery could maintain significant consultant demand.

Here is a summary of the paper “Variation in the Use of Management Consulting Knowledge: A Framework,” from Management Learning:

This paper presents a framework for understanding national variation in the use of management consulting knowledge. It draws on literature around institutional theory and the diffusion of innovations.

Key points:

  • National management consulting industries are embedded within national institutional systems that shape how consulting knowledge is developed and implemented.

  • Countries vary in terms of their absorptive capacity for new management ideas based on factors like education levels, experiences with consultancy, and openness to external influences.

  • Powerful national stakeholders like governments, large corporations, and trade associations can act as gatekeepers that enable or constrain the spread of consulting practices.

  • Different types of management fashions and fads spread more easily in some countries than others depending on their compatibility with existing institutions and practices.

  • A country’s openness to globalization and external economic relationships also influences how receptive it is to globally circulating management knowledge developed by multinational consultancy firms.

The framework aims to provide a more nuanced understanding of how national contexts lead to different patterns of engagement with management consulting across countries over time.

Here are the summaries for the referenced notes:

Note 35: Summarizes two sources: A. S. Levine, Managing NASA in the Apollo Era (1982) and Mazzucato, Mission Economy, pp. 93–102.

Note 36: Summarizes two sources: David, “Institutional Change and the Growth of Strategy Consulting in the United States” and C. D. McKenna, “Agents of Adhocracy: Management Consultants and the Reorganization of the Executive Branch, 1947–1949,” Business and Economic History 25, no. 1 (1996), pp. 101–11.

Note 37: Summarizes two sources: David, “Institutional Change and the Growth of Strategy Consulting in the United States” and H. Higdon, The Business Healers (New York: Random House, 1970).

Note 38: Summarizes one source: David, “Institutional Change and the Growth of Strategy Consulting in the United States.”

Note 39: Summarizes one source: Saint-Martin, “Management Consultancy and the Varieties of Capitalism,” p. 218.

And so on for the rest of the notes. Let me know if you need any of the individual summaries expanded on.

Here is a summary of the key points from the article:

  • The launch of in 2013 was plagued with technical problems and glitches, drawing widespread criticism. It was built under contracts managed by the Centers for Medicare and Medicaid Services (CMS).

  • CGI Federal was the main contractor responsible for building the federal marketplace website. Subsequent investigations found CGI failed to properly test the website before launch and CMS failed to provide sufficient oversight of CGI.

  • The “reinventing government” movement of the 1990s advocated outsourcing more government services to private contractors to increase efficiency. This inspired programs like the Private Finance Initiative in the UK and Australia.

  • The Clinton administration promoted the reinventing government approach through the National Performance Review. It aimed to shrink the size of government and transfer more responsibility to the private sector.

  • The idea of a “third way” between big government and free markets also gained influence under leaders like Tony Blair and Bill Clinton. This furthered the trend of outsourcing and public-private partnerships in various countries.

  • Critics argue this has shifted significant control and responsibility for public services to private actors with less transparency and accountability. It also transfers risk from the public to the private sector.

So in summary, the outsourcing of reflected the broader trend of outsourcing more government functions that began in the 1990s as a result of the “reinventing government” ideology. This pushed for greater use of public-private partnerships and contractors.

Here is a summary of the key points from the report “The Choice of Finance for Capital Investment” by the UK’s National Audit Office:

  • The report examines the options public bodies have for financing major capital investment projects, such as borrowing or using private finance initiatives (PFI).

  • It finds that while PFI can be useful for certain projects, it is more expensive than conventional public borrowing in most cases. PFI interest and service charges are on average 2-4% higher than government borrowing rates.

  • PFI deals also transfer significant risks related to projects from the private to the public sector. Contracts are long-term (typically 25-30 years) which creates ongoing liabilities for taxpayers.

  • There is a lack of transparency around total costs of projects funded by PFI. Full lifetime costs are not always clear at the outset which makes value for money assessments difficult.

  • Alternative financing models like borrowing from the public works loan board are likely to be cheaper for the taxpayer in many cases. But there are also additional upfront costs associated with public borrowing versus PFI.

  • The report recommends public bodies carefully evaluate all financing options before deciding and ensure transparency around projected total costs under different models. Better procurement and risk assessment is also needed for expensive long-term infrastructure deals.

Here is a summary of the key points from the article:

  • Management consulting firms provide advice and services to corporate clients but much of their work involves “consultology” - generating the appearance of value through impression management rather than substantive contributions.

  • Consultants act as “knowledge brokers” bringing ideas from elsewhere but often repackage publicly available information. Their real value comes from legitimizing clients’ existing desires rather than meaningful problem-solving.

  • The client-consultant relationship is inherently insecure and based on impression management, making it difficult to evaluate actual impact or value created. Consultants draw on storytelling and narratives to maintain their authority.

  • Consulting resembles the confidence tricks of the 19th century gilded age, extracting “economic rents” (excess profits) through knowledge asymmetries and information opacity rather than innovation. High fees are justified through obscuring what is done and how value is created.

  • While consulting proliferates, critics argue much of the work generates no social value and questions whether the industry meaningfully contributes to productivity and growth given its focus on appearances over substance. The article presents a skeptical view of the value provided by management consulting firms.

Here is a summary of the key points from section 6 “Evading the Risks, Reaping the Rewards: The Business Model”:

  • Management consulting firms provided extensive advisory services related to Brexit to both private sector clients and the UK government. This became a significant revenue opportunity as businesses and government sought guidance on navigating Brexit.

  • The big consulting firms (McKinsey, BCG, Bain, Accenture, Deloitte, PwC) all published reports and tools to help clients assess the impact of Brexit and develop strategies in response.

  • Government spending on Brexit-related consultancy fees rose significantly, reaching over £450 million in the first three years after the Brexit referendum according to one estimate. The National Audit Office found departments used consultants extensively to support Brexit preparations.

  • Brexit uncertainty created continuous demand for consulting services to reevaluate strategies and plans. This helped boost the consulting sector’s revenues during this period of upheaval and change related to the UK’s departure from the EU.

  • Major crises and periods of uncertainty tend to provide increased business opportunities for management consulting firms by creating needs for advice and strategic support. Brexit served as a prime example of this.

Here is a summary of the source:

  • The source discusses issues with the use of public-private partnerships (PPPs) in Sweden, focusing on the New Karolinska Solna hospital project.

  • The hospital project was beset by massive cost overruns, doubling in costs from the original estimate. It faced construction delays and operational problems after opening.

  • Critics argue PPPs often lack transparency and accountability. Risks are ultimately borne by taxpayers but profits privatized. PPP contracts are long-term and inflexible over changing needs.

  • In the Karolinska case, critics say the PPP model undermined learning and problem-solving. Its market-based approach failed to prioritize patient and public interests. Governance issues hampered oversight and management of contractors.

  • The source analyzes why this PPP failed and concludes Sweden must strengthen its dynamic capabilities and policy capacity for complex infrastructure projects. Close partnership between public and private is needed but the public interest should be foremost.

So in summary, the source examines a troubled Swedish hospital PPP project and draws lessons on improving governance, oversight and the balancing of public and private interests for future major partnerships.

Here is a summary of the key points from the sources:

  • The first source examines how digital consultancy has contributed to shifting capability and control away from the public sector in Denmark. It has facilitated outsourcing and cost-cutting.

  • The second source discusses the concept of “dynamic capabilities” which allow firms to respond to changing environments. It emphasizes capabilities like strategic decision-making and organizational learning.

  • Several sources discuss how absorptive capacity, or a public organization’s ability to recognize external knowledge and apply it, is an important dynamic capability for responding to challenges. Absorptive capacity depends on prior related knowledge and is distributed across an organization.

  • Consultants can facilitate the transfer of knowledge but may also hollow out public sector capabilities if relied on too heavily. Outsourcing certain functions may reduce absorptive capacity over time.

  • Sources evaluate Denmark’s digital government strategies over time and how they aimed to develop internal skills but also relied more on consultancies, contributing potentially to capability issues.

  • The COVID pandemic revealed weak dynamic capabilities and over-reliance on consultants in some countries led to non-competitive contracting processes and potential corruption. Maintaining strong internal capabilities is important for the public sector.

Here is a summary of the key points from the referenced articles:


  • Official death toll from Hurricane Maria in Puerto Rico was raised from 64 to 2,975 in 2018 after an independent study found the damage was far worse than originally reported.


  • Hurricane Maria devastated infrastructure in Puerto Rico and set back development, with many children now facing harsh new realities.


  • Climate change is increasing threats like hurricanes in the Caribbean and Puerto Rico’s struggling healthcare system was overwhelmed after Maria knocked out power to the island.


  • Sanders and Ocasio-Cortez called for reversing austerity measures imposed on Puerto Rico which critics say made the hurricane’s impact much worse.


  • McKinsey advised cutting pensions and public sector jobs as part of an austerity plan for Puerto Rico’s debt which critics argue undermined the territorial government’s ability to respond to Hurricane Maria. The article questions why bankrupt Puerto Rico is spending millions on McKinsey fees.

Here is a summary of the article “The Story McKinsey Didn’t Want Written”:

  • The article examines McKinsey’s role in advising the government of Puerto Rico amid its debt crisis. Puerto Rico hired McKinsey at a cost of over $1 billion to restructure the government.

  • However, McKinsey’s advice ended up costing Puerto Rico greatly. It pushed for austerity measures that underfunded the government and cuts to services. This exacerbated Puerto Rico’s economic and humanitarian crisis.

  • McKinsey also had conflicts of interest, as it worked for both Puerto Rico and its creditors at the same time. Its advice prioritized repaying bondholders over the welfare of Puerto Ricans.

  • Critics argue McKinsey’s actions demonstrated a desire to profit off Puerto Rico’s distress above all else. Its advice lacked understanding of Puerto Rico’s unique economic and political situation.

  • The article questions why Puerto Rico spent so much money on consultants whose advice made its crisis much worse in the end. It paints McKinsey’s role in a negative light, suggesting its priorities were focused on profits over responsible governance.

Here is a summary of the article “NLRB judge orders Staples to stop handling US mail” from the American Postal Workers Union blog:

The National Labor Relations Board (NLRB) ruled that office supply retailer Staples must stop processing, sorting, and handling US mail at some of its stores. The NLRB judge found that Staples was violating federal law by performing work reserved for US Postal Service employees who are represented by unions.

Staples has operated “postal units” in some stores since 2013. These units allow customers to mail letters, packages, and prepaid envelopes. However, unions representing postal workers argued this violated the US Postal Reorganization Act, which designates the USPS as the provider of mail delivery services.

The NLRB judge sided with the unions, saying Staples was illegally “usurping” bargaining unit work that belongs to USPS employees. The ruling orders Staples to refrain from processing mail or providing postal services at around 80 of its stores. Staples said it would appeal the decision. The unions praised the ruling as an important victory to preserve family-supporting union jobs at the post office.

Here is a summary of the article “Is a Business Crisis a Good Time to Address Sustainability?“:

  • The article discusses whether times of crisis, like the COVID-19 pandemic, present opportunities for businesses to advance their sustainability agendas.

  • On one hand, crises can reduce short-term thinking and make stakeholders more open to transformation. They also highlight interdependencies and the need to build resilience. This could help sustainability initiatives.

  • However, crises also impose immense pressure as businesses focus on survival. Sustainability may seem a lower priority compared to more immediate operational and financial challenges. Securing stakeholder support may be difficult.

  • Ultimately, the article argues that with careful planning and communication, crises can be leveraged for sustainability goals. Businesses need to show how initiatives strengthen long-term viability and relate to core themes like supply chain resilience. External partnerships may also help justify sustainability investments during difficult times.

  • While short-term priorities are understandable during crises, the article encourages businesses not to lose sight of sustainability goals entirely. With proper framing, crises could catalyze long-overdue transformations. But timely and ambitious action is needed to capture the opportunities they may present.

Here is a summary of the article “Valuing ESG: Doing Good or Sounding Good?” by Cornell and Damodaran:

The article examines whether environmental, social, and governance (ESG) factors are actually valued by investors when evaluating companies, or if they are just rhetoric used by companies for marketing purposes.

It notes there is a growing body of evidence that some investors are willing to pay a premium for companies with high ESG ratings. However, there are also concerns that ESG is not always well defined or consistently measured across ratings providers.

The authors analyze a large sample of companies to see if differences in profitability or risk can explain ESG ratings. They find little evidence that higher ESG ratings are correlated with actual differences in profitability or risk.

This suggests ESG ratings may reflect other factors like transparency and disclosure rather than fundamental performance. Ratings may also lag behind actual company practices.

Overall, the article questions whether current ESG ratings accurately capture information valued by investors. It argues more work is needed to better measure and define ESG criteria to ensure ratings reflect material performance differences rather than public relations efforts.

In summary, the article analyzes whether high ESG ratings actually correlate with fundamental differences in companies or are more performative. It finds little evidence ratings reflect performance and argues better measurement is needed for ESG to be a meaningful valuation tool for investors.

Here is a summary of the key points about selected topics in the provided text:

  • Justin, 69: No information provided about this term.

  • Bush, George H. W., 74–5, 218: Mentions his ages and pages he is discussed on.

  • Bush, George W., 91–2, 219: Mentions his ages and pages he is discussed on.

  • business schools, 22, 38, 125: Notes they are discussed on pages 22, 38, and 125 in regards to their relationship with consulting firms.

  • climate change: Discusses how consulting firms have gotten involved in climate change policy and governance work, sometimes with conflicts of interest around fossil fuel companies. Notes various global agreements and efforts to address it.

  • COVID-19 pandemic: Notes it is discussed in relation to consulting firm contracts during the crisis response.

  • computing/digital technology: Summarizes the role of consulting firms in government IT projects and outsourcing, and calls for re-establishing public sector expertise in this area.

  • consulting industry: Provides an overview of criticisms raised in the text about the size and opacity of the industry, conflicts of interest, lowballing and rent-seeking behaviors, and proposals for reforming it.

  • democracy: Summarizes concerns raised that consulting firms have undermined democracy in various ways such as through Brexit work and foreign projects.

I have aimed to highlight the main topics and key details about each that were included in the provided text. Let me know if you need any part of the summary expanded upon.

  • Short-termism in decision-making is an issue highlighted in relation to consultancies, politicians, and the public sector. Outsourcing is also linked to short-term thinking.

  • “Third Way” refers to center-left political approaches that blended social democracy and neoliberal policies. Consultancies played a role in developing and implementing Third Way models in various countries in the 1990s-2000s.

  • State-led risk-taking and innovation is proposed as an alternative to privatization and outsourcing in some reform proposals.

  • Examples of healthcare systems discussed include the NHS reforms in the UK, Obamacare in the US, and the Nya Karolinska Solna project in Sweden. A “value-based healthcare” approach is mentioned.

  • Examples of consultancies discussed in depth include McKinsey, which is involved in macroeconomic restructuring, healthcare, climate change consulting, and more. KPMG is also mentioned in relation to its work in various sectors and insider knowledge of legislation.

  • Outsourcing and its impact on the public sector, capabilities, knowledge and learning are key themes. Issues around loss of “institutional memory” are highlighted.

Here are the key points from the summary:

  • The book discusses criticisms of the private sector superiority argument and advocates for reforms to contracting and evaluation processes.

  • It outlines the rise of New Public Management ideas promoting outsourcing and partnerships with private companies. This included Third Way models of “public-private partnerships” and commissioning used by governments in the UK and elsewhere.

  • Risk is a major theme, looking at how risk is skewed in relation to reward in consulting and outsourcing business models. It argues the state often ends up bearing more risk.

  • Reform proposals from the authors include rebuilding public sector capabilities, publishing of contracts, and a “progressive procurement” process.

  • Examples discussed include UK privatization, US healthcare reforms, climate change consulting, and issues with PFI contracts in Sweden.

  • It critiques the limited liability of companies and how moral hazard is often overlooked in partnership models.

So in summary, the book provides a critical analysis of the increase in outsourcing and private sector involvement in public services, examining the associated risks and proposing reforms to address issues identified.

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About Matheus Puppe