Riordan’s Stealth Reformers

More recently, a McKinsey executive has taken on a more active role within the corporate elite. Charles Schetter has become active in the Los Angeles Business Advisors, a coalition of executives formed both to lobby for L.A. commercial interests and to promote civic involvement by business leaders. Over the last year, Schetter belonged to the Business Advisors’ steering committee on city-charter reform, which weighed in on the historic rewrite of the laws governing Los Angeles. The business group successfully opposed the creation of neighborhood councils, due to fears that these councils would restrict commercial development.

Zacarias, who was appointed school superintendent in July 1997, had little alternative but to accept, months later, the Roos and Ouchi offer that McKinsey supply free assistance in the effort to turn around L.A.’s failing schools. But while the insertion of McKinsey smacked of a backdoor attempt by Riordan and LEARN honchos to call the shots, they didn’t get very far. Zacarias accepted some of their positions — for example, the LEARN principle of limiting the authority of the district over individual schools — but the documentation does not bear out that McKinsey became a conduit of control.

In particular, Zacarias resisted pressure to take on the teachers union directly through policy changes. He also declined to support a nascent proposal — floated in a series of meetings last winter involving Zacarias’ top staff, the McKinsey consultants and, on more than one occasion, Roos and Ouchi — to unseat the current union-endorsed school board by forming a private, corporate-backed foundation that would finance challenges to union-funded candidates. That funding is now being supplied through Riordan; Zacarias, who insists that he is apolitical, has so far stuck with the board that hired him.

Many district critics couldn’t care less where McKinsey consultants turn up if they help move the lethargic school system off the dime, but clarifying the company’s role is no straightforward task. It’s sort of like trying to photograph air; you can deduce McKinsey is there, but the company defies visibility by its very nature.

McKinsey, a global firm loosely headquartered in New York, has fashioned a corporate culture and reputation that is fanatically obsessed with secrecy. Its high-priced consultants will never name their corporate clients — for many reasons. The mere linkage of McKinsey to a publicly traded corporation could affect the stock price, or could trigger a counterstrategy by a client’s competitor. Besides, McKinsey’s very surreptitiousness drapes its consultants in a mystique that defies critical challenge. It’s like enlisting secret agents to tell you how to interview job applicants, or whether to lay off 2,000 minimum-wage workers, or acquire Crest toothpaste. This cloak-and-dagger routine succeeded to the tune of $2.5 billion in revenue last year for the privately held concern.

It took nearly a year for the Weeklyto compel the school district, under threat of litigation, to release McKinsey-related documents. A review of these materials offers a case study in the corporate mindset. Much of this advice is rather predictable: stacks of stapled, customized handouts peppered with the sort of bromides that fill the average business book in the self-help section of the local Borders.

The McKinsey presentations included miniseminars on training and evaluating talent, and on the importance of unloading substandard administrators. Quotes from corporate executives are inserted periodically as a sort of glue between the charts and theorems. On one page, a PepsiCo exec breathlessly states, "Our organization and human-resources planning session are more important than our budget review." And there’s this nugget, attributed to Larry Bossidy, CEO of AlliedSignal: "When you’re confused about how you’re doing as a leader, find out how the people you lead are doing. You’ll know the answer."

Zacarias and crew also learned that the most successful corporations "regularly identify the 10-20 percent least effective people with the intention of taking action to upgrade the talent pool." In other words, fire the hindmost.

Not all the materials are boilerplate. The documents include McKinsey research into how L.A. Unified selected, guided and evaluated its principals, and it flunked the district on all counts. "LAUSD’s front-line mechanism to enforce accountability is broken," concluded the consultants. "Given the central role of accountability in the district’s agenda for improving student achievement, this is an urgent issue."

Although the verdict was sobering, it gave Zacarias and Deputy Superintendent Lilliam Castillo the impetus they needed to begin to reorganize the system.

Some of the findings — and the resulting actions — could have made headlines. But much of McKinsey’s work never even got as far as the school board. It was for the eyes of senior management only.

Or so it seemed, until McKinsey emerged as the resident pro bono consultant for the citizens committee. Of course, the name McKinsey — at McKinsey’s request — appears nowhere in the committee’s report. McKinsey only gets vague reference as "an independent, international management consulting firm." Nor would committee co-chairman Harold Williams disclose which McKinsey consultants had been on the case. And while McKinsey’s Chicago-based director of communications finally conceded that McKinsey had assisted L.A. Unified, he would not go further. "I will have to remain mute on our role, or on whether we had one, with the citizens committee," said director of communications Stuart Flack. In this instance, at least, it’s hard to see who McKinsey’s confidentiality policy is protecting except McKinsey itself.