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Responsibility Clawbacks (McKinsey and Purdue Pharma)

In recent weeks consulting firm McKinsey has been back in the news because of the advice it gave its client Purdue Pharma, makers of OxyContin. The advice blatantly looks like increasing drug sales at the expense of patient health and a worsening opioid epidemic. As a result, McKinsey has been fined $573 million.

But even if the Purdue Pharma-related fine is extreme, the example is just one example of McKinsey’s many bad client outcomes. A short list of other bad outcomes or questionable clients include:

  • Advising badly-run government coronavirus responses.
  • Advising financial firms to increase their debt load in the lead up to the 2008 financial crisis.
  • Advising Enron in the lead-up to its financial scandal.
  • Advising Riker’s Island jail on ways to improve safety with the outcome a more dangerous situation.
  • Advising authoritarian governments including Saudi Arabia, Russia, and China.

Continue reading “Responsibility Clawbacks (McKinsey and Purdue Pharma)”

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Changes in Value (Part 1)

When something changes in financial value quickly, unintended consequences abound. When this change happens at scale, affecting many people, the consequences are even more extreme. These changes impact supply and demand and social change around the world.

Let’s look at some examples of value change causing havoc. This week I’m intentionally (well, almost entirely) not writing about the topic you can’t escape.
Continue reading “Changes in Value (Part 1)”

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Incentives

The story had paused for more than two thousand years and with a surprise discovery was then suddenly back in play. In the 1940s and 1950s a sad mismatch of incentives after the discovery of the Dead Sea Scrolls led to the destruction of parts of the ancient biblical documents. That destruction was something that no one wanted and yet, with these priceless historical items, it was logical. Why? Continue reading “Incentives”

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The Opioid Crisis (and addiction-based business models)

It’s common for scalable companies with good business models to involve addiction.

I mean addiction in a broad sense. This includes addiction to both physical products and digital goods and services. Addiction is a retention metric.

And retention (how long someone stays a paid customer or user) is what fuels many businesses. Let’s look at this with opioid addiction, focusing on Purdue Pharma’s product OxyContin. What second-order effects drive the opioid crisis?

Continue reading “The Opioid Crisis (and addiction-based business models)”

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Anything at Scale

While we usually talk about non-linear scale transformations in physical materials (radically different properties exhibited at nano scale, for example) there are also different scale effects driven by people and businesses. What will happen at scale is not always apparent, especially when our observations are biased toward single user or small group settings. Situations can grow less obvious or chaotic with growth.

Let’s look at effects of scale transformations in housing, fast wealth creation in a large population, transportation, and what happens when forces converge on places that are just too beautiful. Continue reading “Anything at Scale”