The Mckinsey Way To Save An Island

Why is a bankrupt Puerto Rico spending more than a billion dollars on expert advice?

- Andrew Rice

Since 2016, Puerto Rico has been buffeted by a natural disaster and several overlapping, man-made catastrophes. Its government is bankrupt and owes $74 billion to bondholders: a staggering sum that amounts to 99 percent of the island’s gross national product, or $25,000 for each of its 3 million men, women, and children. It faces a vociferously hostile president, a stalemated and colonial relationship with Congress, entrenched local political dysfunction, and a bunch of angry creditors—most notably, a group of hedge funds that speculate in distressed debt and are fighting for every last penny they think they’re owed.

“I mean, it’s basically a management crisis,” Bertil Chappuis said one afternoon, as we sat at a Cuban luncheonette in San Juan. “Set aside the politics. Set aside policy. Set aside all of that. There was a true management crisis that had come to a head because of the debt.”

Nail, meet hammer: Chappuis is a senior partner at McKinsey & Company, perhaps the world’s most influential management consulting firm. McKinsey prides itself on tackling the world’s most important and intractable problems. Over its century-long existence, the firm—or

“The Firm,” as its employees refer to it—has conceived and propagated many of the ideas that now rule American business, which is to say, American life. Its influence can be seen in corporate suites (a disproportionate number of Fortune 500 CEOs are ex-McKinsey consultants) and grocery stores (the bar code is a McKinsey innovation), in banks, universities, and hospitals. All the while, the firm has maintained an air of mystery, seldom disclosing the details of its work, deflecting credit when its efforts are successful, dodging blame when they blow up or inflict pain on those on the receiving end of its efficiencies.