Business bookshelf: The Firm

McKinsey & Co., the global fix-it firm for companies and governments, labored in Tanzania in the late 1960s and charged fees so high that they merited a line item in the country's budget, according to "The Firm: The Story of McKinsey and Its Secret Influence on American Business."

Hard-core capitalists might consider McKinsey's big bills and say hurrah for the free market. Demand a price the market will bear and all that.

Author Duff McDonald wonders about McKinsey's boast of having smart guys who can fix any client problem even as the firm suffers high-visibility failures, such as its ill-fated advice on the restructuring of General Motors Co. in the 1980s.

"Is it a con?" he asks. The maddening answer: "Maybe."

McDonald has a good eye for examples of McKinsey's massive institutional ego and seemingly limitless ability to weave a line of baloney to justify its failures. A 1976 memo from one of the firm's directors noted that while he was aware "that we are simply superior people," he would "hate to see us say so" to outsiders.

Notwithstanding the mulish confidence of McKinsey insiders, the firm has been on the scene advising companies that undergo spectacular meltdowns. One example: the firm's 17-year relationship with Enron Corp. And McDonald speculates that many tales of McKinsey advice gone wrong will never get told. While a client might be miffed when their advice is a bust, he says customers are reluctant to sue because it would mean losing access to McKinsey.