How to rebuild a country in five easy steps

by Vault Consulting Editors | March 28, 2011

In the latest edition of McKinsey Quarterly, a pair of McKinsey consultants discuss the ongoing recovery effort in post-earthquake Haiti. Having spent the last year in the island nation doing pro bono work on behalf of the firm, the consultants have gathered enough to identify the imminent "management challenge" facing the Haitian government. In true McKinsey fashion, they've come up with a list of five ways to defeat it.

As a disclaimer, I must say that I'm not a big fan of the whole business-experts-advising-government thing. Consultancies like McKinsey, Deloitte and BCG have earned deserved reputations advising companies primarily on one thing: how to make more money. Or at least, how to keep more money. While I recognize instances in which private sector wisdom can make sense in the public sector (cost-cutting governments often find this invaluable), I find it downright arrogant for consultancies to think that they could successfully direct a government just as they would a business (consider the opposite: businesspeople certainly don't think that the government could do a better job running their companies).

Simply put, governments and businesses exist for fundamentally different reasons. While a business exists to maximize profit, a government exists to protect the best interests of its people. So, while I'm fine with McKinsey advising on points of intersection between the two, the formulation of a comprehensive recovery plan seems like a stretch.

McKinsey examines the Haitian recovery effort in the immediate wake of a presidential election, of which the results won't be announced until April.

Let's have a look at McKinsey's five points:

Communicate – the authors urge the incoming government to present a unified front and deliver a clear, direct message. The government needs to be strong, projecting an image of consolidated power in the nearly-anarchistic country. Open channels of communication to the people.
Decide – Decisions on key issues like housing and debris removal need to be made immediately, and executed to the full extent of the government's power.
Attract investment – Open the country to foreign investment through legitimate channels. Strengthen justice system to give investors confidence.
Staff up, delegate down – Staff government departments with educated, well-paid employees. Delegate decision-making power to those on the ground.
Establish and empower a new development agency – Create a government body to interact with the international community, requesting aid and cooperating on recovery.

So, here's my problem with the private sector/public sector advisory relationship. McKinsey, while nobly-intended, is all about the bottom line: increasing exports, increasing FDI, bringing in bigger donations from the international community. All sure to bring more money into the country, yes. But is that the only right goal to pursue?

As far as money goes, the Haitian government is notoriously corrupt; moreover, while consolidation of power could help speed things up, someone had better make sure that the directives coming from the top are reasonable and not self-serving. And what about all of this foreign involvement with government departments? Of course it's necessary that the international community cooperate with the Haitian people, but only on the ground. If foreign politicians and wealthy businessmen get their hands in the pot in Haiti, when will they leave? Or will they simply shape the system to their liking? And, consider the problem of international relief packages.  Haiti should be strong and judicious in their lobbying for and selection of foreign development aid, for three reasons: first, the government can ill afford to repay bail-out loans for decades to come; much foreign aid is conditional, and Haiti shouldn't let more influential foreign powers shape its economic recovery; and, Haiti must not learn to rely on foreign aid, as so many states similar to itself have done in the past.

Anyway, like the McKinsey consultants I respectfully oppose, I'm not particularly qualified to guide an island nation back to economic and political health. So I won't keep trying. But my point is this: why give advice to third world countries when your expertise is in top shelf corporations?

For more information:
McKinsey Quarterly

Filed Under: Consulting


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