House of Lies

by Martin Kihn

  straw man n very rough idea no one really believes in, often not improved upon and presented to the client as final conclusion

  stretch target n difficult-to-achieve goal; usu. a function of low expectations

  strong-form adj possibly true; usu. followed by hypothesis, e.g., “Marty needs to learn how to develop strong-form hypotheses, or he’s going to get counseled out.”

  stuckee n one who gets stuck with some hideous task no one else wants to do; usu. client team member

  sub n subsidiary

  suboptimal adj loathsome

  summer n intern, e.g., “We have too many summers on the team.”

  swag n a wag, only a smart one

  take-aways n memories; similar to learnings, only without any real information

  target-rich environment n an ecosystem where there is plenty of low-hanging fruit

  task vt assign; usu. followed by “the associate,” e.g., “Let’s task the associate with getting all the ice off our windshields tonight.”

  thought leader n a person who is supposed to know something, as opposed to a consultant

  thoughtware n same as knowledgeware, only doesn’t require reading

  three-sixty n total change of heart (see one-eighty), followed in short order by a total change of heart back to original position; net net, you end up where you started

  tool kit n some combination of knowledge and abilities

  top-line vt, n sales; the money coming into the company, as opposed to the better-known bottom line, which is what is left after the company has paid for its consulting services

  true north n soul, or essence; a term invented by Bain & Co., and understood only by them

  turn off the lights – close down a project after it’s called down, e.g., “Jim is going to turn off the lights at Lucent.”

  visibility n information, e.g., “I don’t really have visibility into the financials right now.”

  visioning n scenario building

  wag n a wild-assed guess

  warm fuzzy n true; used like the phrase “good feeling”; doesn’t happen very often; used in futuristic, skeptical sense, e.g., “If we can get these numbers to add up, this page will be a warm fuzzy.”

  warm handoff n delegation, usu. to client, e.g., “Marty is going to do a warm handoff of all his doodles and stick figures to Marina.”

  we n them, i.e., the client; consultants always refer to the client as “we,” presumably to maintain the illusion that they care

  wordsmith vt make minor edits, e.g., “We need a little wordsmith action on this deck now.”

  work streams n discreet task groups that make up the overall engagement; each work stream may have two to five people assigned to it

  worry bead n concern, e.g., “That upcoming seat launch is my worry bead right now.”

  write down n forgiveness of debt; what happens after someone like the Rainmaker sells a $4 million job to a Hollywood character who decides to spend the money on a boat instead

  Acknowledgments72

  The author would like most gratefully to acknowledge the invaluable contributions of the one person who made this book possible: himself. Nobody really believed he would finish it, and certainly nobody believed it would be published. Many people told him he would never get an agent, that there was no market for a book like this, and that he was much too old to dream. They also told him he would never be able to afford an apartment in Manhattan, and they were right. So at times, he found himself in a state of doubt brought on by the negativity of the pissants around him, but he decided to reject the nay-saying and cynicism of his so-called friends and family and press on. Other people are extremely selfish and probably won’t read this far, but the author knows whom he has to thank for this effort and he does so now as he lovingly dedicates this book, in its entirety,

  To Marty

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  ACCLAIM FOR

  HOUSE OF LIES

  “Simultaneously hilarious and frightening… an insider’s view of the burgeoning world of corporate consulting.”

  —Fort Worth Star-Telegram

  “How candid and merciless Martin Kihn is about big-time management consulting! Such a funny and disturbing cautionary tale! And how fortunate that all new MBAs can now read HOUSE OF LIES and prophylactically disillusion themselves before they charge out into this particular circle of corporate hell.”

  —Kurt Andersen, creator of Spy magazine and host of NPR’s Studio 360

  “His reconstructed dialogue from within his (unnamed) firm and from his time serving clients is alone worth the price of admission, as is his relentless taunting (by name) of McKinsey, Deloitte & Touche, and others.”

  —Publishers Weekly

  “At the end of the day, it’s hard to figure out who the bigger suckers are: the fresh young MBAs… or the corporate clients. With HOUSE OF LIES, we can rest assured that there are guys like Martin Kihn out there to pull off the emperor’s clothes.”

  —John Rolfe, coauthor of Monkey Business

  “No activity avoids Kihn’s scathing pen, including his highly critical analysis of business books.”

  —Booklist

  “Dilbert-philes everywhere will hail HOUSE OF LIES as a revolutionary screed. Kihn uses his MBA-honed skills of analysis to dissect the very industry that purports to do it best… all with devastating wit and clearheaded insight into the secrets ‘they’ don’t want you to know.”

  —Tad Low, creator of Pop-up Video

  1 I.e., cable, pay-per-view, local TV—everything that isn’t ABC, CBS, NBC, Fox, UPN, the WB, or PAX (if any/all of them still exist as you read this).

  2 The official end date of the Age of Irony was August 1989, when now-defunct Spy magazine ran a cover story with Chevy Chase asking rhetorically “Isn’t It ‘Ironic’?”

  3 Omitted due to lack of content.

  4 “Industry” refers to any company that is not a professional services firm, e.g., Time Warner, Microsoft, and GM.

  5 Annual report filed with the Securities and Exchange Commission (SEC) and required of all publicly held companies; it includes detailed financial and operating information, though never quite the information you’re looking for.

  6 I.e., butt kissing.

  7 See Part IV: Analyze This: A Minute History of Classic Consulting Texts.

  8 David A. Nadler and Michael L. Tushman, Competing by Design: The Power of Organizational Architecture (New York: Oxford University Press, 1997), 186.

  9 The ranks are associate, senior associate, principal, and partner; the entire process takes six to eight years, with only one in five who enter the pipeline as associates coming out the other end as partners. Most leave by choice (until recently).

  10 Consultants generally work at the client site Monday–Thursday and return to their home office on Friday.

  11 Vault.com is a Web site with a little information and a lot of gossip about a host of companies, posted anonymously by employees or opinionated observers.

  12 Nadler and Tushman, Competing by Design, 195.

  13 U.S. Bureau of Labor Statistics; company reports; author analysis; “top-tier management consultants,” in this context, include only those primarily engaged in strategy—as opposed to
IT or HR—consulting.

  14 Strategic Consulting magazine does not yet exist.

  15 Two years after his departure, the firm still has no Internet Group.

  16 Consultants News, August 2002.

  17 Business Week, July 8, 2002.

  18 Large employers interviewing on campus often have both “closed” and “open” interview lists—the former by invitation only (based on résumés and contacts), the latter open for bidding, with each student allotted a quota of points to bid across all companies interviewing during a given season. The point-bidding system allows companies to gauge a student’s relative level of interest in working there. Virtually all the eventual hires at a firm are derived from candidates on closed lists, however.

  19 Vault, Inc. Employer Profile: McKinsey & Co., 3

  20 Business Week, July 8, 2002.

  21 Firms prefer to call this “utilization,” which seems less greedy.

  22 This is the sector equivalent of GDP, or the sum of total “value added” by a segment of the city economy; in reality, because there is little manufacture anymore in NYC, it’s wages paid plus firm pretax profits.

  23 New York Times, November 21, 2001.

  24 The final report is posted on the partnership’s Web site at www.nycp.org.

  25 In the U.S., an MBA is generally obtained in two years; the summer between years one and two is often spent doing a ten- or twelve-week paid internship with a prospective employer; and about 50 percent of students get a full-time offer from their summer employer and enter their second year of B-school with a good job in their pocket.

  26 Students and alumni of Harvard Business School never refer to it by its full name, or call it Harvard; they invariably use this acronym, presumably to soften the blow to the egos around them.

  27 Barbara Minto, The Pyramid Principle: Logic in Writing and Thinking (Englewood Cliffs, NJ: Prentice-Hall, 1987), 185; Minto herself graduated from Harvard Business School in 1963 and joined McKinsey’s Cleveland office as the first female consultant; her book is widely thought of as a primer on “the McKinsey Mind.”

  28 “Magic Needed: Perennial Powerhouse Disney Is Struggling, and Many Blame Eisner,” Bloomberg News, August 31, 2002.

  29 This quote is apocryphal.

  30 To be statistically valid, each filter in the weeding-out process would have to be independent of the others—that is, getting into Dalton would not affect the odds of getting into Harvard, which, of course, it does. There are other problems with the analysis, but this is the main one.

  31 Cash bar.

  32 Optional.

  33 Betrayed in Part III: “In the Client’s Own Godforsaken Town.”

  34 Brenda Ueland. “The Art of Listening,” Strength to Your Sword Arm: Selected Writings by Brenda Ueland (Duluth, MN: Holy Cow! Press, 1993), 42.

  35 You don’t speak French and have no idea what this means.

  36 The complete dictionary can be found at the end of the book, as Appendix A.

  37 Don’t inform the client, please.

  38 See warm fuzzy, GUT, and farmer’s math—although farmer’s math is also claimed by a partner based in Amsterdam—in Appendix A.

  39 See Wes Roberts, Leadership Secrets of Attila the Hun (New York: Warner Books, 1990); Alan Axelrod, Elizabeth I, CEO (New York: Prentice Hall Press, 2000); and Laurie Beth Jones, Jesus, Entrepreneur (New York: Three Rivers Press, 2002).

  40 Douglas McGregor, The Human Side of Enterprise (1960; reprint, New York: McGraw-Hill/Irwin, 1985), 419.

  41 Thomas J. Peters and Robert H. Waterman Jr., In Search of Excellence (New York: Warner Books, 1982), 85.

  42 The most admired celebrity in your age group (thirty-two to thirty-nine), according to a recent poll in US Weekly.

  43 Orit Gadiesh, “Protect Your Core Difficult As This May Be” [sic], Maeil Business Newspaper, October 17, 2002.

  44 Available for admiration at http://www.uk.cgey.com/careers/transition/our_people.shtml.

  45 See the Fortune cover story “America’s Most Admired Companies,” March 3, 2003.

  46 This is the wrongheaded practice of confusing a postgraduate’s gross pay (the amount on her paycheck) with the only thing that really matters to that postgraduate: i.e., what she gets to put in the bank.

  47 “Global Strategy Consulting Marketplace” (New York: Kennedy Information, 2002), 71.

  48 No top-tier consultant has ever checked a bag through on a flight voluntarily; they may be often mistaken, but they are not delusional.

  49 This idea originated with the cartoonist Jim Meddick, creator of the syndicated comic strip Monty (www.unitedmedia.com/comics/monty).

  50 You will have more to say on this critical point later.

  51 Including you.

  52 His knowledge of trivia limns a vast lonely childhood spent in the company only of a high IQ and a set of the World Book Encyclopedia; he is well known for being able to recite the longitude and latitude of any world capital, as well as “Strange Facts” about most U.S. cities. For instance, he told you that [Sadtown] contains the Largest Rubber Band Ball in the world, somewhere, and suffers the highest per capita rate of prostate cancer in North America.

  53 Some partners have been known to ban sit-down cafeteria meals altogether; usually, you find it safer to eat lunch in your cubicle while reading USA Today online.

  54 Why this is critical no one has determined; you think that while serving precious little work-related purpose, the nonstop Internet connection is like the lonely man’s television set, always turned on low in the other room, simulating human company.

  55 Tactic number one, of course, is to make sure you bring your own Taurus.

  56 Every Thursday night from 6:00 to 9:00 p.m. Columbia Business School held a happy hour well known among the graduate schools for being the most debauched, rowdiest, and off the hook; Brooklyn Lager sent reps from the factory to fire-hose refill after refill into the snouts of thirsty preprofessionals; no wine was ever served.

  57 Airtime percents are in aggregate—that is, all partners together must account for 80 percent of blather, at minimum; within each band there can be varying degrees of contribution as, for instance, a team dinner unlucky enough to contain two partners might see one of them stepping up with 50 percent and the other with 30 percent.

  58 Women travel with approximately one point four times as much stuff, by weight, as men; the reason for this is unknown, but is said to be related to shoes.

  59 Skew is consumer product world shorthand for SKU or Shop Keeping Units, which are numerical designations for products, with each product—no matter how minutely differentiated (e.g., two-ounce instead of four-ounce size)—getting its own distinct number. A skew is the most precise way to tell products apart.

  60 This logic is belied by the reality of consulting economics—as we saw in Part II, it is for the most part only companies with money to burn who can hire consultants, so having a pack of fresh McKinseyites scurrying through your halls, far from being a sign of impending doom, simply means you have a lot of extra money lying around; this is the opposite of a problem.

  61 “At one of the most profitable, elite law firms in the United States, I started to pose my questions, asking ‘What percent of your clients would you put in the category of “I like these people?” ’ The room broke into laughter, as if the question was absurd. It became clear that many professionals do not expect to like their clients.” (David H. Maister, True Professionalism: The Courage to Care About Your People, Your Clients, and Your Career [New York: Simon & Schuster, 1997], 25. This book was given to all entering associates at your top-tier firm, put on a shelf, and forgotten.)

  62 From Gary Hamel, “Strategy As Revolution,” Harvard Business Review 69 (August 1996).

  63 Once you had a meeting in the FANX at the V43 division of the IAD with the TD in charge of ST&E for the SNS computer network guard. The topic was streamlining the SABI process of the DITSCAP and the DODI 8540, which dealt with interoperability issues. The TD expressed c
oncern that the SSAA template effort was not compatible with the GIAP and would be disapproved by the OSD and the CINCs.

  64 Top secret information, mainly relevant to the intelligence agencies and their clients, is confined to a network called the JWICS. There are rumored to be other, even more secret, networks, and these rumors are no doubt true. As for what is actually on these networks, you can quote an air force major you asked early on during the engagement: “It’s all a lot of crap.”

  65 Speaking of footnotes, you can’t help but notice that many of Porter’s specific company examples cited in Competitive Strategy appear to come from Forbes and, especially, Business Week during a few months of the year 1977 (generally August–December); perhaps, during those recessionary times, Harvard rationed Porter’s access to magazines.

  66 The fourth item down on the Tools menu.

  67 In its defense, Microsoft admits “AutoSummarize works best on well-structured documents such as reports, articles, and scientific papers.” Although you believe this book to be nothing if not a scientific paper, it does perhaps have an… original structure.

  68 “… across seventeen hundred years of combined history in the visionary companies, we found only four individual cases of an outsider coming directly into the role of chief executive” (Built to Last, 173).

  69 Raymond Chandler is rumored to have invented this simile, but you’ve never managed to locate it.

  70 What people in the car parts business call a bumper.