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How McKinsey Destroyed the Middle Class - The Atlantic
How McKinsey Destroyed the Middle Class - The Atlantic

The rise of management consulting firms like McKinsey played a pivotal role in disempowering the American middle class by promoting corporate restructuring that concentrated power and wealth in the hands of elite managers while stripping middle managers and workers of their decision-making roles, job security, and opportunities for career advancement.

Key topics:

  • Management consulting's role in reshaping corporate America
  • The decline of the middle class and the rise of corporate elitism
  • McKinsey's influence on corporate restructuring and inequality
  • The shift from lifetime employment to precarious jobs
  • The erosion of corporate social responsibility
  • The role of management consulting in perpetuating economic inequality
what consequences has the rise of management consulting had for the organization of American business and the lives of American workers? The answers to these questions put management consultants at the epicenter of economic inequality and the destruction of the American middle class.
Managers do not produce goods or deliver services. Instead, they plan what goods and services a company will provide, and they coordinate the production workers who make the output. Because complex goods and services require much planning and coordination, management (even though it is only indirectly productive) adds a great deal of value. And managers as a class capture much of this value as pay. This makes the question of who gets to be a manager extremely consequential.
In the middle of the last century, management saturated American corporations. Every worker, from the CEO down to production personnel, served partly as a manager, participating in planning and coordination along an unbroken continuum in which each job closely resembled its nearest neighbor.
Even production workers became, on account of lifetime employment and workplace training, functionally the lowest-level managers. They were charged with planning and coordinating the development of their own skills to serve the long-run interests of their employers.
At McDonald’s, Ed Rensi worked his way up from flipping burgers in the 1960s to become CEO. More broadly, a 1952 report by Fortune magazine found that two-thirds of senior executives had more than 20 years’ service at their current companies.
Top executives enjoyed commensurately less control and captured lower incomes. This democratic approach to management compressed the distribution of income and status. In fact, a mid-century study of General Motors published in the Harvard Business Review—completed, in a portent of what was to come, by McKinsey’s Arch Patton—found that from 1939 to 1950, hourly workers’ wages rose roughly three times faster than elite executives’ pay. The management function’s wide diffusion throughout the workforce substantially built the mid-century middle class.
The earliest consultants were engineers who advised factory owners on measuring and improving efficiency at the complex factories required for industrial production. The then-leading firm, Booz Allen, did not achieve annual revenues of $2 million until after the Second World War. McKinsey, which didn’t hire its first Harvard M.B.A. until 1953, retained a diffident and traditional ethos
A new ideal of shareholder primacy, powerfully championed by Milton Friedman in a 1970 New York Times Magazine article entitled “The Social Responsibility of Business is to Increase its Profits,” gave the newly ambitious management consultants a guiding purpose. According to this ideal, in language eventually adopted by the Business Roundtable, “the paramount duty of management and of boards of directors is to the corporation’s stockholders.” During the 1970s, and accelerating into the ’80s and ’90s, the upgraded management consultants pursued this duty by expressly and relentlessly taking aim at the middle managers who had dominated mid-century firms, and whose wages weighed down the bottom line.
Management consultants thus implemented and rationalized a transformation in the American corporation. Companies that had long affirmed express “no layoff” policies now took aim at what the corporate raider Carl Icahn, writing in the The New York Times in the late 1980s, called “corporate bureaucracies” run by “incompetent” and “inbred” middle managers. They downsized in response not to particular business problems but rather to a new managerial ethos and methods; they downsized when profitable as well as when struggling, and during booms as well as busts.
Downsizing was indeed wrenching. When IBM abandoned lifetime employment in the 1990s, local officials asked gun-shop owners around its headquarters to close their stores while employees absorbed the shock.
In some cases, downsized employees have been hired back as subcontractors, with no long-term claim on the companies and no role in running them. When IBM laid off masses of workers in the 1990s, for example, it hired back one in five as consultants. Other corporations were built from scratch on a subcontracting model. The clothing brand United Colors of Benetton has only 1,500 employees but uses 25,000 workers through subcontractors.
Shift from lifetime employment to reliance on outsourced labor; decline in unions
The shift from permanent to precarious jobs continues apace. Buttigieg’s work at McKinsey included an engagement for Blue Cross Blue Shield of Michigan, during a period when it considered cutting up to 1,000 jobs (or 10 percent of its workforce). And the gig economy is just a high-tech generalization of the sub-contractor model. Uber is a more extreme Benetton; it deprives drivers of any role in planning and coordination, and it has literally no corporate hierarchy through which drivers can rise up to join management.
In effect, management consulting is a tool that allows corporations to replace lifetime employees with short-term, part-time, and even subcontracted workers, hired under ever more tightly controlled arrangements, who sell particular skills and even specified outputs, and who manage nothing at all.
the managerial control stripped from middle managers and production workers has been concentrated in a narrow cadre of executives who monopolize planning and coordination. Mid-century, democratic management empowered ordinary workers and disempowered elite executives, so that a bad CEO could do little to harm a company and a good one little to help it.
Whereas at mid-century a typical large-company CEO made 20 times a production worker’s income, today’s CEOs make nearly 300 times as much. In a recent year, the five highest-paid employees of the S&P 1500 (7,500 elite executives overall), obtained income equal to about 10 percent of the total profits of the entire S&P 1500.
as Kiechel put it dryly, “we are not all in this together; some pigs are smarter than other pigs and deserve more money.” Consultants seek, in this way, to legitimate both the job cuts and the explosion of elite pay. Properly understood, the corporate reorganizations were, then, not merely technocratic but ideological.
corporate reorganizations have deprived companies of an internal supply of managerial workers. When restructurings eradicated workplace training and purged the middle rungs of the corporate ladder, they also forced companies to look beyond their walls for managerial talent—to elite colleges, business schools, and (of course) to management-consulting firms. That is to say: The administrative techniques that management consultants invented created a huge demand for precisely the services that the consultants supply.
Consulting, like law school, is an all-purpose status giver—“low in risk and high in reward,” according to the Harvard Crimson. McKinsey also hopes that its meritocratic excellence will legitimate its activities in the eyes of the broader world. Management consulting, Kiechel observed, acquired its power and authority not from “silver-haired industry experience but rather from the brilliance of its ideas and the obvious candlepower of the people explaining them, even if those people were twenty-eight years old.”
A deeper objection to Buttigieg’s association with McKinsey concerns not whom the firm represents but the central role the consulting revolution has played in fueling the enormous economic inequalities that now threaten to turn the United States into a caste society.
Meritocrats like Buttigieg changed not just corporate strategies but also corporate values.
GM may aspire to build good cars; IBM, to make typewriters, computers, and other business machines; and AT&T, to improve communications. Executives who rose up through these companies, on the mid-century model, were embedded in their firms and embraced these values, so that they might even have come to view profits as a salutary side effect of running their businesses well.
When management consulting untethered executives from particular industries or firms and tied them instead to management in general, it also led them to embrace the one thing common to all corporations: making money for shareholders. Executives raised on the new, untethered model of management aim exclusively and directly at profit: their education, their career arc, and their professional role conspire to isolate them from other workers and train them single-mindedly on the bottom line.
American democracy, the left believes, cannot be rejuvenated by persuading elites to deploy their excessive power somehow more benevolently. Instead, it requires breaking the stranglehold that elites have on our economics and politics, and reempowering everyone else.
·archive.is·
How McKinsey Destroyed the Middle Class - The Atlantic
The Man Who Killed Google Search
The Man Who Killed Google Search
The relentless pursuit of growth and revenue by Google's ads and finance teams, led by Prabhakar Raghavan, has compromised the quality and integrity of Google Search, leading to the ouster of Ben Gomes, who prioritized user experience over profits
Under Raghavan, Google has become less reliable, less transparent, and is dominated by search engine optimized aggregators, advertising, and outright spam.
Google is the ultimate essential piece of online infrastructure, just like power lines and water mains are in the physical realm.
In April 2011, the Guardian ran an interview with Raghavan that called him “Yahoo’s secret weapon,” describing his plan to make “rigorous scientific research and practice… to inform Yahoo's business from email to advertising,” and how under then-CEO Carol Bartz, “the focus has shifted to the direct development of new products.” It speaks of Raghavan’s “scientific approach” and his “steady, process-based logic to innovation that is very different to the common perception that ideas and development are more about luck and spontaneity,” a sentence I am only sharing with you because I need you to see how stupid it is, and how specious the tech press’ accolades used to be. This entire article is ridiculous, so utterly vacuous that I’m actually astonished. What about Raghavan’s career made this feel right? How has nobody connected these dots before and said something? Am I insane?
Sundar Pichai, who previously worked at McKinsey — arguably the most morally abhorrent company that has ever existed, having played roles both in the 2008 financial crisis (where it encouraged banks to load up on debt and flawed mortgage-backed securities) and the ongoing opioid crisis, where it effectively advised Purdue Pharma on how to “growth hack” sales of Oxycontin. McKinsey has paid nearly $1bn over several settlements due to its work with Purdue. I’m getting sidetracked, but one last point. McKinsey is actively anti-labor.
·wheresyoured.at·
The Man Who Killed Google Search
Inside TSMC’s struggle to build a chip factory in the U.S. suburbs
Inside TSMC’s struggle to build a chip factory in the U.S. suburbs
Upon arriving at the facility, Bruce handed in his smartphone and passed through metal detectors. He was in awe of the semiconductor production line: Overhead rails carried wafers from one station to another while workers in white protective suits kept the machinery running. “It really just felt like I was touring some kind of living thing that was greater than humans; that was bigger than us,” Bruce recalled.
TSMC made attempts to bridge some of the cultural differences. After the American trainees asked to contact families and to listen to music at work, TSMC loosened the firewall on T phones to allow all staff access to Instagram, YouTube, and Spotify. Some Taiwanese workers attended a class on U.S. culture, where they learned that Americans responded better to encouragement rather than criticism, according to an engineer who attended the session.
Several former American employees said they were not against working longer hours, but only if the tasks were meaningful. “I’d ask my manager ‘What’s your top priority,’ he’d always say ‘Everything is a priority,’” said another ex-TSMC engineer. “So, so, so, many times I would work overtime getting stuff done only to find out it wasn’t needed.”
Training in Taiwan, which typically lasted one to two years, wasn’t all miserable, the Americans said. On the weekends, the trainees traveled across the island, marveling at the country’s highly efficient public transport network. Bruce spent his weekends hiking and frequenting nightclubs. He chatted with the families that run night-market food stalls, and entertained strangers who requested selfies with foreigners.
For the Taiwanese, many of whom planned for extended stays in Phoenix, that meant relocating entire families — toddlers and dogs included — to a foreign country. Many regarded it as a once-in-a-lifetime opportunity to explore the world, practice English, and send their children to American schools. Younger families planned pregnancies so they could give birth to American citizens. “If we are going to have children, of course we will have them here,” a Taiwanese engineer told Rest of World. “As an American citizen, they will have more options than others.”
Many experienced a culture shock. The bustling cities of Taiwan are densely packed and offer extensive public transport, ubiquitous street food, and 24-hour convenience stores every few blocks. In northern Phoenix, everyday life is impossible without a car, and East Asian faces are scarce
“Everything is so big in America,” said one engineer, recalling his first impression. He recounted his wife summarizing her impression of the U.S.: “Great mountains, great rivers, and great boredom.”
Having spent years under the company’s grueling management, they were used to long days, out-of-hours calls, and harsh treatment from their managers. In Taiwan, the pay and prestige were worth it, they told Rest of World — despite the challenges, many felt proud working for the island’s most prominent firm. It was the best job they could hope for.
Sometimes, the engineers said, staff would manipulate data from testing tools or wafers to please managers who had seemingly impossible expectations.
A former TSMC staffer who worked on the education program said managers were instructed not to yell at employees in public, or threaten to fire them without consulting human resources. “They would say, ‘Okay, okay, I get it. I’m not going to do that,’” the employee recalled to Rest of World. “But I think in the heat of the moment, they forgot, and they did do it.”
Chang-Tai Hsieh, an economics professor at the University of Chicago, told Rest of World that TSMC had found the U.S. a challenging environment to operate in because of the complicated regulatory process, strong construction unions, and a workforce less used to the long hours that are commonplace at TSMC in Taiwan.
Sitting in a room together, the engineers admitted that although they had made some progress in acclimating to life in the U.S., TSMC had yet to find a balance between the two work cultures. Some Taiwanese workers complained that management was being too accommodating in giving Americans less work, paying them high salaries, and letting them get off work early.
·restofworld.org·
Inside TSMC’s struggle to build a chip factory in the U.S. suburbs
USC professor under fire after using Chinese expression students allege sounds like English slur | CNN
USC professor under fire after using Chinese expression students allege sounds like English slur | CNN
Some pointed out that labeling nei ge or its pronunciation as offensive, as the USC ​administration seemed to do, following the letter, only makes sense within an Anglophone bubble – that doing so portrays the Chinese language as subject to English rules rather than independent and possessing its own contexts
The Black China Caucus, an American organization that describes itself as “amplifying Black voices in the China space,” also defended Patton on Twitter. “The BCC is shocked by how USC mishandled this situation,” the organization posted. “Not only would a quick Mandarin lesson reveal that “nèi ge” is a common pronoun, but USC’s reaction cheapens and degrades substantive conversations surrounding real (diversity, equity and inclusion) challenges on college campuses!”
·cnn.com·
USC professor under fire after using Chinese expression students allege sounds like English slur | CNN
On Openings Essays, Conferences Talks, and Jam Jars
On Openings Essays, Conferences Talks, and Jam Jars
how to write better openings and introductions / intros in non-fiction writing
The beginning is almost never the most compelling or important part. It's just the bit you thought of first, based on your subjective chronology.
Signposting what you're going to write about is good, but starting with an exhaustive list of definitions is extremely boring.
Invoking paleolithic people is an overplayed way to convince us your topic is cosmically important.
Openings need tension – paradoxes, unanswered questions, and unresolved action
Good openings propose problems, pose questions, drop you into an unfinished story, or point at fundamental tensions within a topic. Ideally within the first paragraph or two.
"Good writing starts strong. Not with a cliché ("Since the dawn of time"), not with a banality ("Recently, scholars have been increasingly concerned with the questions of..."), but with a contentful observation that provokes curiosity."A Sense of StyleStephen Pinker
Creating tension in non-fiction work is trickier because your story is (hopefully) constrained by reality. You are not at liberty to invent suspicious murders, salacious extramarital affairs, or newly-discovered-magical-powers to create tension and mystery. You have to deal with the plain, unexotic facts of the world.
Your job becomes much harder if you pick topics with no tension, problems, or puzzles within them. To paraphrase Williams, it is more of a failure to pose an uninteresting problem, than to poorly articulate an interesting one
Your interest in the topic is your best directional clue for finding the tension or interesting paradox. Your urge to write about the thing hopefully comes from a place of curiosity. You have unanswered questions about it. It feels important or consequential for unexplained reasons. You think you've seen things in it other people haven't. Pay attention to that interest.
Problems are a destabilising condition that has a cost for a community of readers that needs a solution. Destabilising condition is just a fancy word for “change” here – a change in the status quo. Put another way, a problem is an expected turn of events, that has undesireable consequences, for an audience who will care about it, that we want to explore solutions to.
Williams is speaking to a community of academic writers in his book. They're trying to present scientific and research problems in plain, objective language, which isn't necessarily what we want to do with narrative writing like blogging or personal essays. We have a little more liberty to put interesting padding around the change, consequences, and solution, such as telling an opening anecdote, or drawing readers in with characters, rich details, and sensory descriptions.
Williams suggests we try to state our problem and then ask a series of so what?'s to get at the underlying problem
For your writing to be worth reading, you need to be exploring something of consequence for someone
When McPhee writes, after first immersing himself in his raw material (field notes, interview transcripts, official documents) for weeks, he then draws a structure for the work. The structure lays out the major themes and scenes he'll work through, in the order that will make them most compelling and coherent.
Developing a structure requires navigating the tension between chronology and theme. Chronology is what we default to, but themes that repeatedly appear want to pull themselves together into a single place. The themes that really matter should be in your opening. Even if the moment that best defines them happens right before the end of the timeline.
·maggieappleton.com·
On Openings Essays, Conferences Talks, and Jam Jars
90% of designers are unhirable?
90% of designers are unhirable?
Many case studies read to me like school homework: they knew what the answer and the process were “supposed to be” according to the textbook, so made up the story to fit. In reality, as you point out, it’s never smooth and linear. It’s messy and loopish. If you’re doing a good job, you rarely end up with anything remotely like you anticipated when you started out.
abandon your dogmatic and idealistic view of the design process, and keep learning about how flexible, messy, and beautiful it is.
I don’t speak about the “ideal” design process for a simple reason: it doesn’t exist. Design is never linear, and all projects are unique. The point is to show and explain your path from the kick-off to the final result in the portfolio.
If you tell a story, include the details and the things that didn’t work and how you adapted to overcome the problem, the design manager will empathise with you. For the five minutes it takes to read your case study, they’ll be in your shoes. It’ll remind them of all the times when they had similar problems and it’ll make them appreciate you and your struggles as a designer.
·uxdesign.cc·
90% of designers are unhirable?
A New Marketplace That Helps Creators Earn More And Gives Brands Easy, Direct, On Demand Access To Creators
A New Marketplace That Helps Creators Earn More And Gives Brands Easy, Direct, On Demand Access To Creators
To quote Alexis Ohanian, “Pearpop is the marketplace for brand deals for anyone with an audience. I love my agency, UTA, but the traditional agency model cannot support the breadth and diversity of internet creators. There’s no way you can have agents in an office doing all those deals, nor should you. You want a marketplace for that, and that’s what Pearpop has built."
Many of the first users were successful artists/creators who wanted smaller influencers with highly engaged followings to share their content to extend their reach and awareness.
As Pearpop has grown, brands have been drawn to its ability to execute influencer activations directly in a quick, targeted, frictionless, hyper-localized, economically attractive manner. Pearpop’s self-serve marketplace is a win/win for creators and brands because it’s as simple for brands to find creators as placing a Facebook, Google, or LinkedIn ad.
The briefs go out as a type of casting call and brands are instantly/automatically paired directly with relevant creators. Brands can accept all that apply or specify to approve each influencer before they post.
“Brands play an absolutely critical role in the Creator Economy, and technology has the power to streamline access to the most relevant creators for a brand in the same way Uber and Airbnb streamlined access to cars or home rentals. As just one example, Pearpop shrinks the average time it takes to launch an influencer program from 6 weeks to 6 hours,” said Morrison.
Another aspect creators like is how easy it is to “get found” because of both the way they’re listed in the database, and how challenges are shared.
While the “Creator Economy” is experiencing hockey stick growth, the sad reality, is only about 1% of creators earn a living from their content. Social media platforms have been the primary beneficiaries.
The Wall St. Journal reported the top 1% of streamers on Twitch earn more than half of all streamer revenue, and the majority made less than $120 each in the first 3 quarters of 2021. In spite of that, the number of creators increased 48% in 2021
·forbes.com·
A New Marketplace That Helps Creators Earn More And Gives Brands Easy, Direct, On Demand Access To Creators
Spatial Software
Spatial Software
There are only so many degrees of freedom for users inside of these apps, which makes them simple to use. But this simplicity also strips away so much of the freedom we have during in-person interactions. You can type any message, but typing a message is all you can do. You can call any person, but talking directly into your camera is all you can do once you're connected. Without spatial interfaces, our current software doesn't give us much expressive control.
In social applications, spatial software has at least three advantages. These three advantages often overlap and bleed into each other.Afforded Intuition: Our natural understanding of space makes spatial software easier to use.Expressiveness: In a spatial interface, more degrees of freedom mean users can interact more creatively with software and with each other.Presence: In many spatial interfaces, we can sense other users through the presence of an avatar or figure.
·darkblueheaven.com·
Spatial Software