THE BIG CON
As a follow-up to the column from a few weeks ago, talking about the Town of Mammoth’s desire to hire a consultant to write an “After Action Report” on the winter of 2022-2023.
But it could also be about the June Lake Chamber’s desire to hire a consultant to form a TBID (Tourism Business Improvement District).
Or it could be about this week’s decision by Mono County Supervisors to spend $71,000 on a consultant to put together a “short-term rental housing study.”
Which apparently cannot be performed by the “Housing Opportunities Manager” just hired by the county for a mere $171,000/year (in salary and benefits).
Pick a project. Pick a number.
I just finished a slog of a read (so you don’t have to!) about the consulting industry. The fitting title: “The Big Con: How the Consulting Industry Weakens Our Businesses, Infantilizes Our Governments and Warps Our Economies.”
But before I start with the book, a short anecdote. A few years back, I decided to combine a visit back to New Hampshire with a job fair at Dartmouth College.
Pay a small fee, they give you a table, and maybe there’s a kid with dreams of being a writer whom you can convince to move out to Mammoth for a year or two.
Across the aisle from my small table is McKinsey Consulting.
And it’s a feeding frenzy. For the very obvious reason that the starting salary for entry-level consultants is well over $100,000. If you have a Masters in Business, $200,000.
And as Big Con authors Mariana Mazzucato and Rosie Collington point out, as of 2013, more than 70 past and present CEOs of Fortune 500 companies were McKinsey alums.
McKinsey represents the golden ticket inside the Wonka bar. The fast pass to corporate riches and influence. And those kids wanted that ticket. Badly. It was like they all had “Corrupt Me” stickers plastered to their foreheads.
Related anecdote #2. I’m just out of college. Early 1990s. A friend of mine who graduated in my class has landed a plum job at Boston Consulting Group. He calls me to tell me that his latest assignment has come from the top brass. They say the clients like sports. So we need to break down what’s made the Chicago Bulls so successful. And apply that formula across various business platforms.
Lunch: Ummm. So you’re gonna advise people to hope they can luck into drafting a generational talent like Michael Jordan?
Friend: Exactly. They think the Bulls ownership and management must have some mission/values statement which informed their ultimate success. When in fact it was just Chicago lucking out because Portland inexplicably drafted Sam Bowie ahead of Jordan in 1984.
In a nutshell, this is what the Big Con lays out.
The refrain you hear these days is that government (public sector) is supposed to run more like a business.
And how does a business run these days? Supposedly, with ruthless efficiency … albeit for the short-term interest of their shareholders.
Because government is not ruthlessly efficient (theoretically, government is balancing competing interests and values and should not treat efficiency as the end-all), there is diminished faith in the aptitude and quality of civil servants.
Back in the day, President Ronald Reagan reinforced this perception with various one-liners. “The nine most terrifying words in the English language: I’m from the Government, and I’m here to help.”
Or, “Government is not the solution to our problem. Government is the problem.”
So there’s that part of it.
The other part is the steep cost of public sector labor, particularly on the benefits side. Healthcare costs for some local agencies (notably Inyo County) just increased 19% year-over-year.
Result being, local administrators can argue that it’s “cheaper” to hire consultants for certain projects since you can limit it to a scope of work and a contract price.
But here’s the rub. More often than not, it takes a lot of your own staff time to bring a consultant “up to speed.”
Further, because you’re handing the project to an outsider, you ensure that your staff won’t get any wiser, described as “Unlearning by not doing” – the more you outsource, the less you know how to do.
As the authors write, “A government department that contracts out all the services it is responsible for providing may be able to reduce costs in the short term, but it will eventually cost it more due to the loss in knowledge about how to deliver those services.”
But then consider – who are you actually hiring? The 23- or 24-year old kid just out of college who doesn’t know much? What datasets are they using? Are the datasets recycled or out of date? And are you really getting valuable information pertinent to your own community, or are you just getting a hodgepodge of rote analysis derived from a broad swath of communities?
A quote from one senior management consultant: “Theoretically, the value of large consultancies is that you are able to accumulate knowledge, develop sectoral expertise and create a cross-company view of what works best. Consultancies can then go into a company and develop tailored, specific approaches to client problems. But in reality, only a generalized knowledge base is used and these are applied to most companies … when we put together proposal decks, or we put together the final report, I would say that 50% of the slides we used were already used on other clients.”
So what are you hiring these folks for?
In many cases, it’s to cover one’s ass. To have the consultant rubber stamp a desired conclusion. So if you implement the policy and something goes wrong, there’s a third party to blame.
Which amounts to chickenshit leadership.
In brief, what else is going on.
A source told me post-Obstacle Course Racing (OCR) championship last weekend that the event drew approximately 1,250 entries for 500 participants (each participant generally signing up for multiple events).
The event subsidy was $450,000.
So essentially, Mammoth Lakes Tourism paid $1,000 per athlete.
MLT spent approximately $300,000 combined on ~25 other events over the past year.
Inyo County Supervisors voted to give a $25,000 handout to each of five rural fire districts (Olancha, Big Pine, Independence, Southern Inyo, Lone Pine) at its regular meeting Tuesday.
The agenda item’s heading: “Distribution of One-Time Funding to Volunteer Fire Districts to Bolster Emergency Medical Services.”
The whole thing amounts to a sop to the rural districts after Supervisors had to pay off REACH Medical to continue offering ambulance service in Bishop after Coast2Coast Public Safety pulled out.
Because you can’t toss money in one direction without tossing money everywhere.
A long-term contract with an EMS Provider for the Bishop area has yet to be finalized.
Coast2Coast Public Safety couldn’t make it in Bishop because its temp contract did not include an exclusivity agreement within the service area. Northern Inyo Hospital ‘s ER referrals all went to REACH Medical, essentially freezing out Coast2Coast, which abandoned ship within 30 days.
Supervisor Jeff Griffiths asked that Bishop Volunteer Fire Dept. also be included in the handout lineup. Because the agenda item only referenced the other five rural fire districts, Bishop will have to be debated at a future time.
The vote to approve was unanimous.
