Kevin Sneader Discusses McKinsey’s Past Controversies

AMANPOUR AND COMPANY: Now, we turn to the people who advise global leaders. McKinsey & Company is the world’s most powerful consulting firm. But in the past year, it’s come under fire for its involvement with the opioid epidemic and its work with Saudi Arabia, just a couple of topics that our Walter Isaacson addressed with McKinsey’s Global Managing Partner Kevin Sneader.

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WALTER ISAACSON: Tell me exactly what a management consultant firm like McKinsey does.

KEVIN SNEADER, GLOBAL MANAGING PARTNER, MCKINSEY & COMPANY: Well, we’ve been around since 1926. And I think over time, it’s changed. Originally, the insight was we take sides and apply it in the art of business. We help clients solve their toughest problems. That’s still very true. We still help our clients in tough problems. But increasingly what we’re focused on is helping not just solve the problem but achieve an improvement in performance. And so we have, over the years, built up a set of capabilities that allow us to help our clients as they think about the future, how their business needs to change, take on that change, and overtime transform themselves, and that’s what we do.

ISAACSON: And how in the world did you get into this?

SNEADER: Oh accidentally is the honest answer. I did grow up in Glasgow. I went to Glasgow University, best university in the world I think. I was president of the student union. And that meant we run the largest bar in Glasgow. And I was clearing out the bar. And sitting on there was a printing brochure for McKinsey and I thought that’s interesting. So I sent off a letter and I said look, I’m a law student at Glasgow University, I’m interested in applying to McKinsey. And I got a very nice note back that essentially said, “We don’t hire from Glasgow University. We hire from Oxford. We hire from Cambridge. But my father is Scottish and I would be happy to speak with you. Why don’t you come down to London?” So I got a free trip to London, met with three or four people. I thought it was quite interesting. And so they sent me the letter with the offer and showed it to my parents. And they looked at the number and they thought, you should take that job. So I did. So I’d love to tell you I always wanted to be a management consultant. That would just not be truth.

ISAACSON: One of the things that McKinsey does a lot is try to figure out the future of the workforce. How do you see the workforce evolving over the next 10 years?

SNEADER: Well, the change that’s happening has got many features to it but the biggest feature is of course technology. Technology is changing the way work is done. We have a statistic. Sixty percent of the jobs receive more than 30 percent of the tasks completely changed. And then everyone is going to face — when I say everyone, not everyone but anyone has got to face real change. As a result, it means the workforce has to be rescaled or scaled to take technology — most of it. That’s a pretty profound change. And what is happening, I think, therefore is there’s a good associated with that. It’s a bit of I think it’s an industrial revolution. I think we’re seeing a real piece of change and scale of change. And ultimately, more jobs will be created. But the real issue is what happens in this transition. How do you ensure that people get the skills they need to succeed? So we’re going to see a work force that’s going to put more emphasis on knowledge, more emphasis in services, more emphasis on really being able to make the most of capabilities that allow you to get the work done in different ways than today. That’s a big shift. But I’m an optimist. I think there’s a way through this. I think it requires real investment, jobs, and training, and education. But if that is done, again, there will be more work, not less work when this is all finish.

ISAACSON: So what do we about growing inequality that has come with the globalization and technology?

SNEADER: Well, I think we have to remind ourselves that the nature of inequality is not straightforward. Why do I say that? There are 1.2 billion people who have actually been taken out of poverty in recent years. So the inequality between countries is actually narrowed. The developing world is catching up. However, within countries, inequality is growing. It’s growing. And to address that, I think there’s a lot of change that is going to have to be embraced. One is a rethinking of education itself to ensure that it’s actually able to deliver the skills to cope with new technologies. And that’s not happening fast enough. Secondly, I think there also needs to be a hard look at the way in which health care and the cost of education have risen far faster than any other cost when it comes to housing and employment. And, of course, that’s a big issue. So how do you get those cost, look at them, and think about the way in which you can ensure provision of basic health care and education to keep that inequality gap from getting to really heart? So there’s a number of places where I think we actually need to look hard at the way in which globalization is working in order to just allow it, to do what it does do well, which is actually promote and narrow the gap between countries. But between countries, it’s a real issue.

ISAACSON: McKinsey has been lambasted recently in the “Wall Street Journal”, “New York Times”, and particularly in the “New Yorker” for so many different things. If you don’t mind, let’s go through some of them. Starting with Purdue Pharma which — the opioids. And you were a consultant there, McKinsey was. And so they gave them advice on how to turbo charge, and I think that was the word used, the selling of opioids. Was that a mistake?

SNEADER: One of the things we’ve decided is we’re not going to do anymore work on opioids. We knead that decision. And any work we do with opioids is 100 percent focused now on alleviating the crisis. It’s clearly a crisis. It’s communities across the country and beyond. And in that context, of course, we want to be on the right side where we’re helping solve the crisis, not create the crisis. That’s what we’re focused on.

ISAACSON: So why did you get involved in opioids?

SNEADER: You know, it’s many years ago. And I think at that point in time, the way in which people saw the problem is different than the way in which we see it now. And the way we see it now, it’s a crisis. It’s a situation where there’s so many things that need to happen. The business community needs to be involved, the social care and provision needs to be involved, health care, I want us to be involved in making a positive contribution to the opioid crisis that’s now existing.

ISAACSON: So how are you going to do that?

SNEADER: Well, one of the things we’ve already been doing is we’ve invested a lot in really having a look at how to bring people together to address this crisis. And if you look, you’ll see we’ve written quite extensively the way in which different parties are going to have to pull their resources, their science, their business understanding, their understanding of the different options that are to treat pain, which is one of the reasons these opioids are originally on the market. All that has to happen. And the health care system has to work together. So we have a lot to see about how that can be brought to a place in which the communities work together to solve this terrible crisis.

ISAACSON: Another one is the Saudis and your relationship with the Saudi and especially something that kind of leaked. It was an internal document but it talked about some of the dissidents on Twitter and they end up getting arrested by the Saudi government. Was there a mistake that was made in there or what should you have done differently?

SNEADER: I think there are many mistakes in that situation. But let me be crystal clear, trying to draw cause and effect in that I think is very hard. There was an internal document. It was to demonstrate how to use analytical techniques to assess the impact of different marketing techniques. And they happened to use response or government policies the way to do just that. But in doing so, they identified, as you see — they didn’t identify. They actually just looked at three people who were very prominent, 800,000 followers. They weren’t difficult to spot. So I think it’s very hard to draw cause and effect. That said, of course, I regret that. I said at the time I was horrified. I repeat that. I am horrified. But I want to just be clear, we do a lot of very important and good work in that country. It’s not in the world’s interest that Saudi Arabia disabled or unstable. And one of the things that I’m proud of is we have four or 500 people there that a third of them are female. We’re one of the biggest employer of women in that country. Youth unemployment in Saudi Arabia is 25 percent. Again, it’s not good if those people don’t have jobs to go to. So I’m actually quite proud of the work we do in Saudi Arabia. And we are not engaging in work that really I think touches on some of the issues that are more problematic about that country.

ISAACSON: Well, you have Mohammad bin Salman implicated in the death of the journalist Khashoggi. Are you having different ways of looking at what you will do for the Saudis now that it’s become so much more controversial?

SNEADER: I think one of the things we’re doing in Saudi Arabia, we looked very hard at how we think about different countries. And so we have over actually the last couple of years been looking again at the way in which we think about the activities in countries and really try to draw some lines about where we will not work in defense, not work in policing, not work in the tier. It’s not just Saudi Arabia where we made that decision but it is important we understand there are countries in this world that are difficult. But let me also say this, 61 percent of the world, according to Freedom Host, doesn’t live in democracies. And so we, I think, have to decide to be engaged with the 61 percent or do we not. I believe we should engage but I also recognize that we should engage responsibly and we’ve put in place and are working through a series of measures to keep focus on ensuring we are on the right side of those issues.

ISAACSON: One of the things that people have pushed McKinsey on is a little bit more transparency.

SNEADER: Yes.

ISAACSON: And, you know, hey, I’ve worked in companies where McKinsey was a consultant, we didn’t want them going around —

SNEADER: Sure.

ISAACSON: — that was a timing, to say we’re a client and yet, you know, this lack of transparency, it seems, has caused some trouble. Are you going to push a little bit more transparency as part of the values of McKinsey?

SNEADER: Yes. To some extent, that’s why I’m here.

ISAACSON: That’s right.

SNEADER: You know I do think there are many previous global management partners of McKinsey we’ve ever sat down and have this kind of conversations. So the short answer is yes. You’ve got to remind yourself, and I think you just touched on it, why we are less than transparent in the sense that this was all grounded in a strong belief of reverence for client confidentiality. Do whatever it takes to protect the client. I was so pervasive that when I joined the firm back in 1989, one of the first things I got told was when you take a taxi to the client, make sure it drops you two blocks away from the client. That was good advice that I grew up in Glasgow. The taxis in London, it just meant I got lost but it also meant you couldn’t figure out where we were going. So I think times have changed. People want to know. We will still protect our client confidences. We still will but we can be more open about ourselves. We can actually meet with folks, let them see who we are because I think a lot of this is because of mystique. People don’t really know. Who are this McKinsey consultants? Are they strange sort of people that just have no emotion? Actually, we have a lot of emotion. And you’ll find it’s full of people who are sons and daughters of educators, as I am. My father is an academic, my mother is a teacher but loaded with people like that who are actually choosing to do what we do because (inaudible) help people succeed. And that’s what we do. And we don’t seek the limelight. It’s not the place to be if you want to be in the limelight. If you want to have your photo up there and be celebrated as a great success, go to Wall Street, don’t come to McKinsey. And that’s all part of this sort of — we’re a bit introverted. So that has to evolve. I want us to be more open about who we are. I think we can be more open about the kind of people we have. We can be more open to the kind of work we do. But we’ll stop short as we still want to present our client’s interest ahead of our own.

ISAACSON: Do you think that when it’s a government, as a client, and as you say, that’s less than 10 percent of your business. I would guess that in some ways you have to be more transparent and open and say yes, this government or this government entity is a client of ours?

SNEADER: Well, you have to remember that with governments, too, it’s up to them to disclose what they think needs to be disclosed. What we have to do, of course, is comply with all the requirements associated with serving government. But it’s for government to decide what they say or not — don’t say about any work they commissioned us to do. It’s not for me to second guess them.

ISAACSON: Yes, but you could say it’s probably a problem, as it turned out tobe in South Africa, you got sort of caught up in that was it our bribery but the whole bribery scandal that brought down Zuma, that if we’re going to work for governments, it’s part of our internal world that we have to be upfront about that?

SNEADER: Well, let’s be careful because that was a state owned enterprise which I’d say is quite different from working directly for South African government, just to be clear. And I think in that case —

ISAACSON: Although the president was somewhat implicated in it?

SNEADER: Well, you know the situation is — I’m not going to defend —

ISAACSON: Yes, OK.

SNEADER: I’m not going to — so I’m going to agree with you and say absolutely he was but it’s a different situation from serving a true government. But what it meant was — and one of the things — one of the first things I did is when I came into the show was I flew to South Africa and I got up there and answered a lot of questions. And I said we got some things badly wrong, badly wrong. We partnered with the wrong people. We actually never began work with them but we were close to people we shouldn’t have been close to. Secondly, the way in which we thought about the fees was just wrong. Shouldn’t have been success fees —

ISAACSON: Explain that to me. In other words, you were getting a fee based on — it could have gone up to hundreds of millions.

SNEADER: It could have been much higher.

ISAACSON: Yes.

SNEADER: And I think was the intent is to tie your success to the success of the work, I think in that context, it’s not going to be a success.

ISAACSON: Are you going to change your policies?

SNEADER: We have.

ISAACSON: How?

SNEADER: On that — well, when it comes to that kind of government work, and I’ll use your term government, that kind of work, we’re not going to do that. We’re going to cap any fee upside because we recognize that it’s just not the kind of environment where you want to have those kind of fees in place.

ISAACSON: You’re a Scotsman living in Hong Kong.

SNEADER: Are you going to ask me about Scotland?

ISAACSON: Yes, I’m going to ask about Scotland and Brexit but also Scotland in the context of Europe.

SNEADER: Well, I’m a very proud Scott. And I care deeply about my country. I also happened over the years at a personal level believe that Scotland is a place in the United Kingdom that’s (inaudible) over many years. And so if you ask me personally what I think about my own view is that’s where I am. But the complexity of Scotland’s relationship with England, Wales, and Northern Ireland, and let alone into that European Union where there’s the whole question of can Scotland ever be admitted to the European Union, that’s a question which people are wrestling with. It’s one that is firmly in political territory for the politicians to answer because it’s going to require an awful lot of political will and motivation to sort that through. All I care about is that Scotland does well in the future. And I do believe that no matter which path we take, the key to Scotland’s future is actually an education system that has been the leader in the U.K. and that needs to continue, an environment in which entrepreneurship can thrive, that is the home of Adam Smith, and a beautiful country that I hope more and more people choose to visit. And all of that, I’ll be focused on the politician’s concerto where the border gets (inaudible).

ISAACSON: You mentioned Adam Smith, your fellow countryman. His theory of Moral Sentiments I think is one of your favorite in his book.

SNEADER: It is.

ISAACSON: Explain how that informed your thinking.

SNEADER: Well, one of the things that, of course — I don’t think it’s a tragedy at all that Adam Smith is known for the invisible hand in the 1776, the wealth of nations. I think some other things happened that year that maybe some parts of the world cared about what was being written at the time. But in 1759, he was the professor of moral philosophy at Glasgow University.

ISAACSON: Your university.

SNEADER: My university. And he wrote The Theory of Moral Sentiments. And in that book, he set out what I think is actually still highly relevant to society as a whole. He wrote about the community interest. He wrote that the business person should not be separate and attached but involved in the community. He wrote that the business person should be willing to sacrifice their little interest. And he called it their little interest in the interest of the community as a whole. And that is sort of Scotland. We are, I think, very much the fabric of the country as people care about community, care about society. And so when I read things like the business roundtable statement, I have those words in my head because while for some, they’ll think that business and business is business and I respect that was a view which was very prevalent as I was growing up. I don’t hold that view. I hold Adam Smith’s view that the interest of the community, don’t be separate and attached. Be involved. Think about the community. Recognize the common interest. That’s Adam Smith.

ISAACSON: And so McKinsey and the business roundtable are part of this movement to say business is not just about return on shareholder value but it’s about being a part of the larger community. Do you see that as being the way of the future?

SNEADER: I do because I also think it’s good business. I mean the (inaudible) doing good by doing well is true. I think if you look at this issue of short-termism, I think there’s no plaintiff evidence that says those who are taking a long-term view ultimately do better. And I think a long-term view inevitably leads you down a path that says crude metrics that just occur in a few economic measures aren’t going to tell you whether the health of your business is actually going to endure. And if the community is not doing well and society is not benefiting, ultimately, you’re you’re not going to benefit either. So that’s why I believe and I absolutely feel quite strongly and passionately about this notion that business (inaudible) but we should never think we’re politicians. That’s where you’ve got to understand — well, I don’t answer the question because I say that’s for the politicians because I have a healthy regard for the reality that my vantage point is ultimately one that starts from the business cycle.

ISAACSON: Now, finally, to get back to Brexit. Suppose McKinsey gets called in by a ramp group of (inaudible) or something, says, you know, this is a real mess. Show me the way out. What would you do to figure out how the United Kingdom could deal with the Brexit issue?

SNEADER: Well, I’d remind myself and I’d remind the politicians that when you look at the United Kingdom, one of its great challenge is productivity. It has lagged Europe in terms of productivity for the last decade. And if you look at the United Kingdom, I’d say let’s remind ourselves what are the fundamental issues, whether you believe in Brexit or you don’t believe in Brexit, that this country needs to solve? And you start with productivity and you look at the various elements that Britain needs to Address in order to ensure that it is the successful economy that we all want it to be, whichever side of that to get your own.

ISAACSON: Kevin Sneaders, thank you so much.

SNEADER: Thank you.

ISAACSON: Appreciate it.

SNEADER: Nice to meet you.