Many of my students go into the consulting industry when they graduate. Most go to one of the 'Big Four' (PWC, EY, Deloitte, KPMG). I've only had a couple that I know have gone to McKinsey, and none to Boston Consulting or Bain (the 'Big Three'). So, I was interested to read what Mariana Mazzucato and Rosie Collington would have to say in their 2023 book The Big Con. The thesis of the book is simple, as they explain in the introduction:
This book shows why the growth in consulting contracts, the business model of big consultancies, the underlying conflicts of interest and the lack of transparency matter hugely. The consulting industry today is not merely a helping hand; its advice and actions are not purely technical and neutral, facilitating a more effective functioning of society and reducing the "transaction costs" of clients. It enables the actualisation of a particular view of the economy that has created dysfunctions in government and business around the world.
The book uses a large number of real-world stories of 'consultancy firms gone wrong', stitching them together into a narrative of how the consulting industry makes us worse off. Many of the individual stories will not be unknown to those who regularly keep up with business and politics. What Mazzucato and Collington do well is track the rise of the consulting industry over time, and how it has become endemic across the public sector in particular. They use far fewer examples from the private sector, but I don't doubt that many of the issues that governments face also apply to private sector firms, but just do not have the same societal impacts. Through the development of the consulting industry, Mazzucato and Collington unpack the industry incentives at play, the interconnections between consulting, business, and government, and the conflicts of interest that result. Finally, they outline the consequential impacts on state capacity. In particular:
The more governments and businesses outsource, the less they know how to do, causing organizations to become hollowed out, stuck in time and unable to evolve. With consultants involved at every turn, there is often very little "learning-by-doing." Consultancies' clients become "infantilised"... 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, and thus how to adapt the collection of capabilities within its department to meet citizens' changing needs.
What is missing from the discussion of problems is an evaluation of just how costly the loss of capability in the public service is. Governments are focused on cost savings, and there are short term cost savings. But how large are the long-term losses that result from the loss in the ability to monitor and evaluate contracts (as one example)? This would have given the arguments in the book more weight than the few case studies that Mazzucato and Collington use.
Moreover, while the explanation of the problem and the examples used to illustrate it are good, the solutions proposed are underdeveloped and somewhat banal. For example, while "a new vision, narrative and mission for the civil service" is a shout-out to Mazzucato's previous book Mission Economy (which I reviewed here), the book fails to provide a coherent pathway to extricate the public sector from the grip of consultants. I imagine that, faced with the need to develop a new vision, narrative, and mission, the first thing that many government departments would do is to contract a consultancy to assist with that need. Mazzucato and Collington don't offer a way of avoiding that outcome. Their second solution, of investing in internal capacity and capability creation, is likely to be important. But again, it requires the public service to disentangle itself from the consulting industry, and the ways that can be achieved are not explained. Third, embedding learning into contract evaluations is important, but it relies on other factors that are not addressed, such as the ability of the public sector to retain talent. Finally, mandating transparency and disclosure of conflicts of interest should almost go without saying, but it is good that Mazzucato and Collington say it.
Overall, I enjoyed reading this book. It's a couple of years old now, but the examples are still highly relevant, and the consulting industry's tentacles are still firmly wrapped around the body of government in many (most?) countries. Mazzucato and Collington have highlighted the problem, and shone some light on potential solutions. What we need now is a strong public sector leadership, backed by government, that is willing to rebuild capacity and capability in sensible ways. Hopefully, this book is one step on that journey (and apologies to my future students if the consulting industry becomes smaller as a result!).
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