Sunday, December 2, 2018

Winners Take All - philanthrocapitalism at work

Anand Giridharadas's new book, Winners Take All - The Elite Charade of Changing the World, is   an excellent read. 

It is essentially about how a reductionist view of important public issues and problems, which suits the interests of the global cosmopolitan elites (or MarketWorlders, as he calls them), has helped sweep under the carpet deep-rooted structural issues, shrunk the space for political debates and actions, and engendered the feel-good-do-good world of non-government and philanthropic activities. 

This is more like a manifesto which describes symptoms and offers diagnosis. But thankfully, it stops short of offering prescriptions. 

Sample this description of Sean Hinton, late of McKinsey, Goldman Sachs, and Rio Tinto, then the Chief Executive of Soros’ Economic Advancement Program in 2016. Early in his youth, Hinton had moved to Mongolia to study traditional music and lived there for nearly a decade.
In Mongolia, Hinton’s approach was to learn from the people he was studying by hanging back, observing, realising all he didn’t know. Success required letting other people lead him, as he remembers it: “The tools that I used to bringing were largely to do with perceiving and sensing; they were largely to do with intuition; they were largely to do with creativity and looking for connections; and they were very much to do with the people”. For years on end, Hinton had had the experience of resisting easy assumptions, avoiding the certitude, hunting for cues, letting others lead. “You turn up in a tent where you put your legs, when you give the gift that you’ve brought with you – I just became so attuned to all of those things. The body language – am I doing right? What are other people doing? You become just absolutely, completely attuned to reading those signals from people around you”. This approach to an alien environment was what he called humility. “If you think about the skills of living in a tent, in a foreign culture, in a foreign language, in a certainly foreign environment, you don’t have a choice but to get taught humility every day,” he said. “You’re surviving on that, and your very survival is based on recognising that you don’t know, and being absolutely open to everything – being absorptive of every influence around you and listening.”

At McKinsey, he realised, he was expected to operate very differently… Instead of listening, absorbing, trying to decipher slowly and respectfully the dynamics of the space one had entered, the high-flying, high-priced consultant was expected to jump in and know things... They offered a powerful way of stepping into a world you didn’t know and reconstituting its reality so that the solution became more obvious to you than it was to the client’s native executives. The protocols allowed for a strange kind of earned presumptuousness. Equipped with a special way of chopping up problems, parsing data, and arriving at answers, the consultant constructed authority. His job was, as Hinton put it, “the bringing to bear and the championing of the religion of facts – incontrovertible, scientific, unemotional, unencumbered-by-people facts.”

The protocols that allowed for this certitude were, as Latin once was, a mother language that had birthed many vernaculars. These vernaculars shared a common purpose: Having arisen not so much within industry as among the insider-outsiders of the business world – consultants, financiers, management scholars – they offered a way to get smart on other people’s situations. The banker trying to come up with the initial share price of a soon-to-be-listed chemical company wasn’t necessarily an expert in fertiliser. The hired-gun corporate strategist for a pharmaceutical company wasn’t necessarily an expert on drug-delivery vehicles. The protocols some specific to domains like finance or consulting, some more cross-cutting – allowed such figures to sweep in and break down a problem in a way that surfaced new realities, produced insight, sidelined other solvers, and made themselves essential.

Hinton learned the McKinsey vernacular of the protocols. In the book, The McKinsey Mind, by Ethan Rasiel, the firm’s protocols are distilled: Consultants first find the “business need”, or the basic problem, based one evaluating the company and its industry. Then they “analyse”. This step requires “framing the problem: defining the boundaries of the problem and breaking it down into its component elements to allow the problem-solving team to come up with an initial hypothesis as to the solution”. This is the insta-certitude at work – hypothesis-making comes early. Then the consultants must “design the analysis” and “gather the data” to prove the hypothesis, and must decide, based on the results, whether their theory of the solution is right. If it is, the next step is “presenting” in a crisp, clear, convincing way that can win over clients understandably wary of fancy outsiders’ big ideas. At last, the solution comes to the ‘implementation’ phase, through “iteration that leads to continual improvement”…

It (this approach to problem-solving) was not about drawing on knowledge, and often sneered at doing so; it was, rather, about being able to analyse a situation despite ignorance, to transcend unfamiliarity… It was to demonstrate how you reason, based on the assumptions you make. The idea was “if you break the problem down into small enough pieces that are logically related and make educated guesses combined with facts where they’re available, or at least you join the dots from the facts that you’re able to put together, you can construct a logical and compelling answer to pretty much any problem.” In other words, Hinton’s initiation into McKinsey and the protocols more generally was being urged to spit out a preternaturally confident answer to something he knew nothing about…

Hinton picked up the little rules and figures of speech of… consulting… For example he learned it was best to speak in lists of three, based on research about how people absorb information. If you have two important points to make, you add a third; if you have four, you combine two or just lose one. Hinton also learned the commandment against taking on excessively large problems. Do not “boil the ocean”, one versed in the protocols might tell another. The protocols tell you to reduce the scope of what is considered, limit the amount of data you drink in, to avoid becoming overwhelmed by the volume of reality you confront. And lest you worry that this shrinking of your purview will harm your ability to solve the problem, the protocols offer the eighty-twenty rule… the business maxim that 20% of many systems generates 80% of the results – one-fifth of one’s customers providing most of one’s revenue, to cite the most common example. The protocols told the problem-solving swashbuckler that it was possible to swoop in, find the 20%, turn some dials in that zone, and unleash great results. These tricks were not about looking at a problem holistically, comprehensively, from various human perspectives; they were about getting results without needing to do such things.

At McKinsey, Hinton learned to make so-called issue trees – visual maps to help you break down a nicely scoped, eighty-twentied, pond-sized problem into its elements. It starts with a challenge such as making a bank more profitable. That increases in profitability can come through raising revenues of lowering costs, the first layer of subcategories. Each rung of subcategories must be, in firm parlance, ‘MECE’ – mutually exclusive and collectively exhaustive. In other words, raising revenues must be entirely different from lowering costs, and all routes to the ultimate goal should passthrough them. Now each subcategory can be broken down into sub-subcategories – the increase in revenue, for instance, can either come from existing businesses or new ones. And so on, until there are sub-sub-sub-subcategories. To be fair, this kind of exercise can allow one to see, with a clarity that is impossible when looking at the whole, the dials that might be turned relatively easily and yet have outsize effects – for example, closing those three high-rent bank branches in Manhattan might generate 80% of the savings required. Yet this schematising, whether in the McKinsey vernacular or others, can at times be limited by its arbitrariness. Categories are made that may or may not correspond with reality. Divisions are carved between things that might be connected rather than mutually exclusive. Things are broken down in the way that happens to be most obvious or useful for the parachute, and sometimes this smashing of reality into hundreds of little pieces makes a solution seem apparent while in fact obscuring the true problem. Those who could set the parachuter right, those with valuable traditional and local knowledge, cannot speak the new language of the problem, illiterates in their own land…

The protocols had grown out of corporate problem-solving, but increasingly MarketWorlders were employing them to elbow into the solution of social problems traditionally considered in other ways, by more public-spirited actors. And the more people accepted the ideal of the protocols as essential to public problem-solving, the more MarketWorld was elevated over government and civil society as the best engine of change and progress… They have evolved from being a specialised way of solving particular business problems to being, in the view of many, the essential toolkit for solving anything. The protocols are increasingly seen as vital training for working in charity, education, social justice, politics, health care, the arts newsrooms, and any number of arenas that used to be more comfortable with their own in-house apprenticeship. Organisations like the Gates Foundation hire the protocol bearers to solve the problem of education for poor children in America. Civil rights organisations put protocol bearers on their Boards, taking not only their money also their advice… young people… are persuaded by the surrounding culture that only by learning the protocols can they help millions of people.

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