Riordan’s Stealth Reformers

Photo by Cindy AndersonThe name McKinsey never surfaces in the debate over L.A. school reform and next month’s school-board election. But McKinsey & Co., one of the globe’s leading business consulting firms, is a player — both in the school superintendent’s office and in private with business leaders who’ve pounced on the school-board incumbents.

There’s really only one reason you haven’t heard the name McKinsey: It’s a secret. McKinsey doesn’t want the public at large to know what its consultants are doing — even though the work is being performed free of charge as a public service. As in the private sector, McKinsey has operated in the background, behind closed doors, preferring to let the "clients" take the credit or blame for the results.

For about 18 months, the official client has been L.A. schools Superintendent Ruben Zacarias, whom McKinsey consultants have assisted on a variety of initiatives. But the firm’s key patrons are Mayor Richard Riordan and local corporate executives determined either to control or shake up the school-district bureaucracy.

Tracking the footprints of McKinsey is, in effect, an exercise in looking at how Mayor Riordan — the city’s would-be "education mayor" — and his allies have tried to control, or at least influence, senior district officials and the way they run the school district. It also demonstrates Riordan’s longstanding and increasing frustration at his inability to sway a school district that he embraced years ago as a philanthropist, and more recently dismissed as shamefully inept.

Riordan’s displeasure over the school system is evident in his current campaign to toss out three school-board incumbents. But prior to this effort, the mayor and his allies used back-channel methods more in keeping with Riordan’s experience as a millionaire venture capitalist. His old world was McKinsey’s world, and it’s not surprising that Riordan’s team would lead McKinsey to the door of the school district.

It was Riordan’s hard-charging education capos, former Assemblyman Mike Roos and UCLA management guru Bill Ouchi, who brokered McKinsey into the Los Angeles Unified School District in the first place, in the fall of 1997. And last fall, when Roos and Ouchi joined the newly formed Committee on Effective School Governance — consisting mostly of business leaders critical of the school district — McKinsey also came onboard, as chief consultant.

Last month, this "citizens committee," as it is known, released a withering criticism of how the district conducts business. Key elements of the report echo confidential documents prepared in the course of McKinsey’s work with senior district administrators. The report calls for the school board to get out of the way and let Superintendent Zacarias do his job, but it also explicitly fails to endorse Zacarias. Mayor Riordan, meanwhile, has backed his school-board slate of three challengers and one incumbent, bankrolling the effort with his own money and with contributions raised mainly from the business people who are the spine of the citizens committee.

"I hate to sound paranoid," said Eli Brent, who heads L.A. Unified’s administrators union, "but it looks like the McKinsey consultants prostituted themselves. It’s like the therapist who trades on your secrets after you unburden yourself."

McKinsey was not in a position to offer a defense — because company policy forbids even confirming the existence of a McKinsey consultation. But attorney Harold Williams, the co-chairman of the citizens committee, was quick to say that McKinsey had carried no confidential district intelligence into his hands. According to Williams, McKinsey synthesized information about the practices of other school districts across the country, and analyzed "appropriate roles" for boards of directors of both corporations and public bodies, while examining, in contrast, "how this school district was operating."

As for L.A. Unified, the citizens committee needed no inside information, said Williams, a onetime chairman of the U.S. Securities and Exchange Commission, and long involved in corporate and foundation efforts to assist schools. "The way the district functions is pretty transparent to most of us on the committee. We know L.A. Unified. We ourselves have been at board meetings and have been dealing with the school district over the years."

Still, McKinsey’s several roles inevitably raise the question of whether the consultants acted as a fifth column inside L.A. Unified to get information on the school board, including whether Superintendent Zacarias and his staff were up to the job, and whether this knowledge contributed to the mayor’s decision to push for a new school board — the body that hires the superintendent.

"When you attack Rome, you attack the pope," said Brent of the administrators union. "I feel very strongly that Mayor Riordan is actually attacking the superintendent."


Zacarias himself declined to question McKinsey’s actions — in an interview, he said he was glad to receive the company’s help, and that he feels comfortable about calling on them in the future. Of course, it’s not as though he originally had much choice in the matter.


According to sources, matchmaking Zacarias with Mc-Kinsey was the direct work of Mike Roos, president of the corporate-sponsored LEARN school-reform effort, and Bill Ouchi, a management guru at UCLA and former chief of staff to Mayor Riordan. Both Roos and Ouchi are closely allied to Riordan, who in turn has relied heavily on McKinsey in the past. It was McKinsey consultants who helped Riordan — then a private citizen and millionaire businessman — to develop the LEARN reform program in conjunction with other corporate and community leaders. McKinsey later audited the progress of LEARN in the project’s early stages. And when Riordan became mayor, he brokered a deal for McKinsey to provide a pro bono analysis of Metropolitan Transportation Authority management, a move that prefigured the eventual dismissal of then–MTA director Franklin White.

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 Weekly to 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.

The citizens committee is a reasonably diverse group, though it leans in the direction of being white, male and rich. There is basically one way to get on this committee: You must be invited to join by attorney Harold Williams and retired Lockheed chairman Roy A. Anderson, the committee’s co-chairs. Nearly all the 26 members have been involved with LEARN or the Los Angeles Annenberg Metropolitan Project, which has poured millions of dollars into L.A. schools. Besides Williams and Anderson, prominent participants include retired Times Mirror chairman Robert Erburu, Urban League president John Mack and L.A. Chamber of Commerce president Ezunial Burts, as well as Roos and Ouchi.

For Roos, Ouchi and several other members, the citizens committee represents their second bid to set the district agenda. Last summer, with Mayor Riordan, they tried and failed to organize a mayor’s task force on education. That effort fell apart in large measure over the mayor’s desire to link the task force directly to the school-board campaign by endorsing candidates. The mayor finally concluded that he could select and raise money for candidates on his own. The concept of a task force, meanwhile, passed to other hands, namely, those of retired executives Williams and Anderson, who took up the effort to organize the current citizens committee. Their group has declared that it will not endorse candidates collectively. Williams readily concedes, however, that the school-board election is not off the radar screen; the committee wanted to get its report out soon enough for it to become an issue in the campaign.

Williams added that most committee members have a history of volunteer involvement with L.A. Unified that has left them dissatisfied and frustrated. And it shows in the just-released committee report.

The school board receives the harshest criticism, for having too many "top" priorities and changing direction repeatedly, for protecting favored administrators, and for second-guessing and undermining the superintendent and his staff. "The board’s failure to stick to a single plan creates an administrative nightmare, marked by needless confusion and waste at every level . . . Unless it changes its way of operating, we have no reason to hope that new attempts to improve student achievement can succeed." Most of all, the committee accuses the school board of counterproductive micromanagement.

Many of the complaints could have come directly from topics Zacarias discussed with McKinsey. For example, district documents prepared by McKinsey float the idea of streamlining operations by ending the practice of having the school board approve relatively small expenditures, a notion that reappears in citizens-committee recommendations. The same goes for a suggestion to reduce the number of agenda items at board meetings. Moreover, some of the same research into the practices of other school districts is referenced both in school-district documents and in the citizens-committee report.

But Zacarias can’t take too much comfort in the report’s support for a strong superintendent. In one section, the Zacarias administration is lumped with the guilty parties. "While the LAUSD board of education and district management have endorsed the reform initiatives," the report reads, "the board’s culture and the district’s bureaucracy have repeatedly frustrated these initiatives."

Critics of the school district could argue that, at worst, McKinsey did nothing more than fight the good fight for school reform on separate fronts — inside and outside the district. But at least one veteran district insider, who requested anonymity, was not sold on the virtue of what had happened. "Given that McKinsey is a firm with an international reputation for keeping things confidential, I am stunned they would be in both places."


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