January 21, 2018

How social media muteness endangers your company: The crisis at McKinsey

McKinsey recently learned a difficult lesson about what happens when the world takes your thought leadership marketing seriously—and when you lack the ability to respond in the moment through social media.

The trouble started when the McKinsey Quarterly published an article in early June entitled How US health care reform will affect employee benefits,  based on a survey the firm did about what will happen to employer-sponsored health care insurance coverage when the President’s health care law goes into effect in 2014.

A textbook example of pragmatic thought leadership
The article itself is one of the best examples of thought leadership I have ever read. It is bold, clear, authoritative, and based on solid research. It is a textbook example of what we at ITSMA call pragmatic thought leadership: it takes a current issue of concern to the company’s target audience and evaluates what may happen in the near term without any mention of company methodologies or offerings. The piece settles right into the Florsheims of the average HR manager and paints a picture of what might happen to their benefits programs when the law takes effect.

That picture is stark and scary.

The survey predicts that 30% of employers will drop health care coverage for employees altogether, throwing them into the government-mandated health insurance pool of individuals without company coverage. Among employers with the higher level of knowledge about the law, the percentage that would drop coverage rises to 50%.

Such a bold and relevant piece of thought leadership was bound to capture mainstream media interest, and this one certainly did—another coup in McKinsey’s long string of thought leadership marketing successes.

The chattering classes intrude
However, something as politically charged as the healthcare debate is not the normal territory of buttoned-down consulting firms like McKinsey. It was like letting a dumb teenager into one of McKinsey’s glass conference rooms with a stack of fireworks and handing him a match. Something important was bound to get damaged.

And so it did.

Republicans cited the article chapter and verse, because it lent some credence to the idea that the world would fall into communistic chaos as soon as the evils of Obamacare were unleashed. Meanwhile, the White House attacked McKinsey’s survey as an “outlier,” saying that other studies from Rand, the Urban Institute, and Mercer all showed that the law would have little impact on the number of companies with coverage.

Journalists look for trouble and McKinsey stonewalls
The political stir encouraged journalists and bloggers to try digging deeper into the story and that’s when McKinsey got into trouble. When a blogger for Time asked for more details on the survey methodology, she says McKinsey stonewalled. That information vacuum led some bloggers to fill it with questions about the quality of McKinsey’s research and its motives. The biggest credibility blow was struck by a blogger at the New Republic, who pointed out that unlike reports from the firm’s own “semi-autonomous think tank” the McKinsey Global Institute, the healthcare survey did not undergo a formal peer review process. Ouch.

Too late, transparency—and defensiveness
Of course, you know what happened next. On June 20, long after the bloggers had already moved on, McKinsey finally made the survey and its methodology transparent and issued a cranky and defensive statement about the survey that helped things not at all. Here’s why: One of the most compelling things about the article is its boldness. In one passage, the authors take on all those who think healthcare reform will be an easy ride, including none other than the Congressional Budget Office Itself:

“The Congressional Budget Office has estimated that only about 7 percent of employees currently covered by employer-sponsored insurance (ESI) will have to switch to subsidized-exchange policies in 2014. However, our early-2011 survey of more than 1,300 employers across industries, geographies, and employer sizes, as well as other proprietary research, found that reform will provoke a much greater response.”

Wow. That’s pretty unequivocal. Hey CBO, you’re wrong!

All of which makes McKinsey’s too-late response to the criticism all the more mealy mouthed. Check this out:

“Comparing the McKinsey survey to economic estimates, such as the CBO’s, is comparing apples to oranges. While the McKinsey Quarterly article about the survey cited CBO estimates, any comparison is not apt. We understand how the language in the article could lead the reader to think the research was a prediction, but it is not.”

Oh, I get it. We readers are just too stupid to know a prediction when we see one. That wasn’t a prediction, it just looked like one to the uneducated. Maybe if we had all gone to the upper two percent of business grad schools like the folks at McKinsey we would have known better. That’s the height of arrogance.

Companies without a human face will suffer
But hey, I’m not here to say yet again that companies should be transparent in a crisis and respond quickly and in a non-defensive manner to criticism rather than letting it fester. You’ve heard all that before.

I’d like to posit another important piece missing from the McKinsey picture: people.

Despite its prowess in thought leadership—McKinsey is simply the best—the firm is falling dangerously behind in social media. This crisis unfolded online and in social media. All the company needed was to get some of its well-spoken hot shots out there blogging to clarify thinking behind the survey and things would have gone a lot better. Companies that lack a human face and hide behind their brands—no matter how good those brands are—will suffer in the era of social media. That static, institutional explanation of the healthcare survey on McKinsey’s website is like a billboard flashing “We don’t get social media!”

It’s ironic, but there is a person who could have responded to this controversy in a very interesting way. It turns out that a McKinsey internal expert on the healthcare industry, Bowen Garrett, was one of the authors of the Urban Institute paper that claims that healthcare reform will not cause a big disruption in employer insurance. Gee, how about a quick blog interview with Garrett, or a video, or podcast? But McKinsey doesn’t do blogs or anything else timely on its website. It’s a slave to that big (admittedly wonderful) publishing machine called the McKinsey Quarterly.

There are many things that social media can’t do, but one thing they can do is give you the opportunity to turn on a dime and inject thought leadership into the conversation when it is most needed. Companies that can’t do it will suffer the consequences.

What do you think?

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  • Really good post I agree with in most aspects. The problem in both directions is that distinguished sources will rightfully seek brand cover in their history of research or reporting, fairness and vetting. McKinsey earns that over time just like you or I can or have seriously sought to establish in our own work in our own way. 

    What has changed is that a McKinsey can no longer merely retreat to brand reputation and expect that will be enough. Every source of brand credibility is subject to dismissal as a veil for an agenda, and every source is easy to challenge for veracity and character (rather than the evidence at hand). The replication and inflation of the response can easily dwarf the original point.

    I learned of this very post from twitter, not because I knew and respected Christopher Koch. It didn’t take even 140 characters for the person who led me here to open the door and disparage McKinsey. Their diligence or culpability is a worthy story, but by that measure secondary to the feints of the cynicism available to anyone in the secondary media.

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  • Hi Jim,
    Great points. The blogosphere isn’t known for fact checking. I think it’s even worse in the political blogosphere, but partly that is a result of the completely irrational atmosphere in US politics these days. Thanks for the thought-provoking comments.

  • Waynette Tubbs, SAS

    Thanks so much for a critical eye on such a tricky subject. We’ve all heard it before, but it bears repeating: Even a big brand can suffer if there’s no human face to engage with the public.

  • Thanks, Waynette. I think we hear these admonitions about getting involved in social media so often that they start to sound like bromides. But companies can’t be complacent.

  • Great (bold) article!

    Apropos socbiz ignorance: I miss a +1 button 🙂 

  • Hah! Good point, Pawel, I’ll get on that one. Thanks for reading!

  • Whilst I’m with you that they could have handled the social media side of things a little better, and certainly used it to manage themselves out of the mini-crisis they’ve created, I don’t think it’s the social media that they handled badly – it’s the PR (which in turn impacts all channels of communication)

    They should have anticipated interest (after all, that’s why they did the survey), checked internally for ho might be affected – notably for existing surveys and authors – and been ready.

    This angle could have been taken by anyone – journalist, blogger or even internally – and ultimately was.

    I’ve pulled surveys before now because the consequences of putting it out serve no-one. It’s basic level  PR work to think through who might read what into a story – and to not see that disagreeing with government figures, especially if you’re McKinsey, is a painfully basic error.

  • Hi Claire,

    I see your point, but avoiding controversy is not the way to become or remain a thought leader in my view. I also don’t think that handling social media well means remaining completely mute. I don’t think they should have pulled the survey; they should have done a better job explaining it and defending it. The methodology of the survey was defensible and its findings were defensible. The error appears to have been comparing it to other reports that were based on economic modeling rather than on survey data. That could have easily been explained. Furthermore, there are some experts who are skeptical of the findings in the other reports. And McKinsey has an expert who co-authored one of those other reports. Having a well-rounded discussion about the topic would have taken the edge off of the criticism and would have shown that McKinsey was not being a tool of the right wing (as some bloggers frantically claimed) in coming out with the survey. McKinsey wants to consult with its customers about HR benefits like insurance coverage, so it can’t be afraid to engage in the discussion or avoid the discussion or pull out if things get too hot. That era is over. Besides, McKinsey has too many smart things to add *not* to be part of the discussion!

  • Hi Eugene,
    I’ve worked with many PR people over my career and I would never beat up on them. I know what they go through. I don’t think I’m doing that here. I think the decision whether to be present in social media is not a PR decision, it’s a corporate decision. I think PR can be a great enabler of social media, but the communicators need to be the subject matter experts.

  • Eugene

    Chris … my apologies. My comment re: placekickers and PR folks was not directed at you. I didn’t think you were beating them up in your post. It was in response to some of the comments to your post. (I should have replied to the comments themselves. Sorry about that.)

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