At the first Committee on Reducing Poverty meeting, which submitted its conclusions this week, chairman Eli Allalouf explained that his work is being carried out with support from McKinsey Israel, which is helping to manage the complicated process, and strengthening it with global data and analyses. Allalouf emphasized that McKinsey will not make policy recommendations, and that its support will not replace the committee’s work.
The committee members, senior executives at the National Insurance Institute, Bank of Israel, and the Ministry of Social Service’s research departments, did not quite understand why McKinsey representatives were being brought in to interfere with their work.
The committee is not alone in this. Since the Israeli branch of the international consulting firm opened in 2000, McKinsey has taken part in almost every important government process in Israel. McKinsey advised Israel Post, helped the Ministry of Defense improve police operations, provided research to the Prawer Committee, which focused on issues related to the Bedouin, looked into the matter of greenhouse gas emissions on behalf of the Ministry of Environmental Protection, advised President Peres, and helped the Tel Aviv Stock Exchange (TASE) chairman increase liquidity.
Every government ministry has a scientist in its field. The Ministry of Education has educational advisors, the Ministry of Housing has planning engineers, and the Ministry of Environmental Protection has scientists who are familiar with every aspect of the subject, not to mention officials in each and every office, all holding academic degrees, who can contribute a thing or two to the formulation of any strategic plan. And there is also the Knesset research center, whose job it is to issue reports like McKinsey’s.
We don’t pay enough to the people holding the aforementioned positions? We need to spend millions more in public funds on McKinsey? Why?
I have an answer: Over the years, McKinsey has become the national ‘insurance policy.’ Anyone who wants to show that he or she is doing serious, in-depth work immediately calls on McKinsey, as it is the ultimate badge of quality. And they are not idiots at McKinsey. They charge the State reasonable rates, some of their work is even pro bono, but the company can then add “Formulating Israel’s economic strategy” to its resume, which is worth tens of millions of dollars when they market their services to corporations in the free market around the world.
Let’s assume the government can hire “external” consultants, certainly if it leads to some remarkable solution, but I am hard pressed to recall when McKinsey ever came up with a groundbreaking strategy, or any out-of-the-box thinking that brought about significant change. McKinsey gathers detailed data, and analyzes the data, but any internal researcher can do this just as well.
Want a few examples? Israel Post, which employed the company’s services under the previous CEO, is currently on the verge of bankruptcy. The Ministry of Defense is still trying, desperately unsuccessfully, to streamline. However, cellphones, which McKinsey said in the 1980s have no chance of catching on as a viable product, seem to have done okay.
McKinsey thrives in companies with no clear ownership. When administration is corporate, and responsibility is obscure and short-lived - ‘insurance’ is needed. Ben Gurion did not need McKinsey to establish the State of Israel; Levi Eshkol did not need its services to develop it; and, back to the current era, Moshe Kahlon did not need McKinsey’s service, or any like it, to reform the mobile market.
So, from now on, when you read that some minister, or some chairperson of some government committee, gets muddled up, like Allalouf, and calls in McKinsey, know that he has not done so to do his job better, but to cover his own back.
Published by Globes [online], Israel business news - www.globes-online.com - on July 3, 2014
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