It’s called’Corona Special’ from consulting company… Sometimes hundreds of billions of won was compensated for wrong diagnosis

Input 2021.03.26 06:00

Demand for consulting surges in preparation for corporate’post corona’
An unusual boom in consulting companies such as McKinsey, BCG, and Bain
“We need to remember LG Electronics’ smartphone failure”

The United States declared a’public health emergency’ in 2017 when abuse of narcotic analgesics (opioids) spread like an infectious disease. At that time, in the United States, about 450,000 people died as narcotic pain relievers were indiscriminately prescribed even for minor pain such as joint pain. As McKinsey, a world-renowned consulting firm, is pointed out as one of the main culprit of this incident that has made the American society tumultuous, there are growing concerns over the side effects of management consulting that only pursue profits in the United States.

Over the past decade, McKinsey has devised several strategies to promote the sale of oxycontin, a narcotic pain reliever made by Purdupharma, a US pharmaceutical company. He advised to focus on selling high-volume products to maximize profits, and to alliance with other pharmaceutical companies to effectively respond to regulatory regulations. The U.S. state government claimed that McKinsey had been actively helping to sell pain medications, driving thousands of people to pain medication addiction and death.

In the end, McKinsey took responsibility for the wrong consulting and was forced to pay $45 million in reparations to the US state of Nevada, the British Financial Times (FT) reported on the 22nd. Accordingly, the compensation that McKinsey agreed with 50 states in the United States increased to a total of $69 million (about 700 billion won). Former President Kevin Sneider McKinsey resigned from his post last month in the aftermath of the incident. The New York Times said, “In recent years, McKinsey has made a number of serious mistakes, such as the’Opioid Outbreak’, and his reputation has begun to crack.”

The’consulting boom’ is happening around the world as more companies are trying to restructure their business and discover new businesses due to the corona crisis. Not only companies, but also the governments of major countries such as Italy and France are reaching out to global consulting companies to establish strategies for distributing vaccines and using the Corona Economic Recovery Fund. Consulting has emerged as one of the means to break through the crisis of companies, but the opinion that excessive dependence should be vigilant as companies can take advice from consulting companies as it is and can cause social problems beyond business failure, as revealed in the recent US opioid crisis. Comes out.

According to the business world on the 26th, foreign consulting companies such as McKinsey, Boston Consulting Group (BCG), and Bain & Company are enjoying the special coronavirus. This is because domestic companies are seeking advice from these consulting companies while responding to the management uncertainty arising from the corona crisis and establishing new strategies for the future. As major group companies have declared this year as the first year of ESG (environmental, social, governance) management and will accelerate digital transformation, the demand for related consulting is on the rise.

Consulting requests are also rebounding in the US and Europe this year. Source Global Research, a market research firm, predicted that the US consulting market will grow by about 9% this year as companies set up growth strategies after the coronavirus. FT reported that McKinsey succeeded in attracting a large number of high-end talent from the Ivy League last year despite various controversies. The McKinsey Korea Office also recruited manpower to respond to the increasing demand for consulting companies in recent years.

However, some Korean companies have suffered painful business failures due to the side effects of consulting in the 1990s and 2000s, so there is also a cautious argument.

LG Electronics (066570)The mobile phone business is a representative example. When Apple first introduced the iPhone in 2007, LG Electronics’ feature phone (phone with only the ability to make and receive calls) was winning and winning, ranking third in the world market share. At that time, LG Electronics, led by former vice chairman of Abuse, did not respond in time to changes based on McKinsey’s report that’smartphones will cease to be a typhoon in a teacup’.

Rather, according to McKinsey’s advice, it chose a strategy of’selection and concentration’, reducing the number of smartphone R&D (R&D) personnel. LG Electronics was unable to read the global trend changing to smartphones and belatedly jumped into the smartphone market and struggled for many years. Currently, LG Electronics is considering withdrawal of the smartphone business, which is not profitable.

In recent years, in France, criticism continued that the vaccine distribution strategy commissioned by BCG and others was ineffective. The French government recently signed an advisory contract worth 11 million euros with six consulting companies, including BCG, McKinsey, and Accenture, so that the vaccine can be quickly and effectively distributed to hospitals and nursing homes. The New York Times said, “We faced criticism that the French vaccination campaign led by a private consulting firm was too slow.” Reported.

In the current business environment where the boundaries between industries are blurred and uncertainty is high, consultants who can grasp the flow of change and provide strategic advice with a cool eye of a third party are helpful. It can grow, so I advise you to keep a good balance. A business official said, “Even if you receive consulting from external experts, the final decision is made by the management of the company, so a strategy is needed to make the most of the benefits of consulting but avoid unconditionally accepting advice.”