McKinsey & Co.: What Do They Know?

McKinsey & Co. is considered the top management consultancy in the world. Right now the company is influencing the planet's economic future as it advises the British government on the low-carbon economy and helps the US Federal Reserve figure out the bank bailouts. But to the firm's critics, the McKinsey crew are Enron-enablers who predicted cell-phones wouldn't be popular. Their management theories are sometimes based on gross oversimplifications of the real world, as Steve Tobak noted in a recent BNET post. And their forecasts can be wrong when they rely on shoddy extrapolations, as was the case with their 2007 analysis of how hedge funds, private-equity firms, Asian sovereign capital pools and petroleum exporters would fare in the future.

Now McKinsey is in the news again as it has been hired to help publishing powerhouse Conde Nast "rethink" its business. There are rumors that McKinsey will recommend deep layoffs at the free-spending home of Vogue and the New Yorker. Blog mogul and Conde critic Nick Denton supposes that the business arm of the operation needs a third party report to force tough decisions. So here are my questions: When companies turn to expensive consultancies like McKinsey, how often is management really looking for a fresh outsider's perspective? How often are bosses just looking to justify hard decisions they were trying to make anyways? Please share your thoughts below.